China Rongsheng Sees Wider Loss on Sluggish Ship Orders
Time：2014-08-01
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The Shanghai-based company expects a “significant increase” in net loss for the six months that ended June 30 compared with a year earlier, according to a filing to the Hong Kong Exchange today. The shipbuilder cited its “conservative operation strategies” for the slump after customers revised or canceled orders as global demand stayed sluggish.
Rongsheng’s woes illustrate the difficulties private Chinese shipbuilders face competing in an industry dominated by state-owned yards with government backing and easier access to financing. China’s shipbuilding industry became the world’s largest after hundreds of private shipyards opened to vie for orders just as the global recession cut worldwide trade and vessel demand.
The company’s stock has risen 31 percent in Hong Kong trading this year, compared with the 6.2 percent gain in the benchmark Hang Seng Index.
Rongsheng posted an annual loss last year that widened 15 times to 8.7 billion yuan ($1.4 billion), from 572.6 million yuan in 2012. It will lose money for another three years, Barclays Plc analyst Jon Windham said in an April 11 report.
The shipbuilder has since June 2013 sought or secured HK$4.4 billion through the sale of convertible bonds, including a proposed HK$1 billion lifeline from a holding company controlled by Shi Yuzhu, the billionaire chairman of New York-listed gaming company Giant Interactive Group Inc.
Rongsheng Chief Financial Officer Sean Wang said in May that new orders were starting to improve and that finances were stable.