Rongsheng drops in HK trading debut
By Ding Yining |
November 20, 2010, Saturday
|
Print Edition
Print Edition
CHINA'S largest privately-owned shipbuilder, Rongsheng Heavy Industries Group Holdings, fell on its debut in Hong Kong trading yesterday on speculation that its price is overvalued.
Rongsheng closed 0.5 percent lower at HK$7.96 (US$1.03) after rising to HK$8.15 in the morning.
The Shanghai-based shipyard raised HK$14 billion after selling 1.75 billion shares at HK$8 apiece. The price was about 30 times this year's estimated earnings compared with 27 times for China Shipping Industry Co, the country's largest shipbuilder. The proceeds will be used to build dry dock as well as support offshore engineering projects.
An analyst at a domestic brokerage, who didn't want to be named, said Rongsheng hasn't won enough new orders to justify its IPO price.
Rongsheng CEO Chen Qiang said he is confident about growth in the shipping industry and expects the offshore engineering sector to grow sharply. He sees the firm to grow in the marine engineering and machinery equipment sectors as it diversifies its revenue stream.
After sailing through choppy seas in the past two years, shipbuilders are starting to win more new orders as a rebound in global trade is steering the industry to a recovery.
China's new shipbuilding orders nearly tripled in the first 10 months of this year to 54.6 million deadweight tons, the Ministry of Industry and Information Technology said on its website.
Rongsheng predicts profit at US$243 million this year, up 24 percent from last year.
Rongsheng closed 0.5 percent lower at HK$7.96 (US$1.03) after rising to HK$8.15 in the morning.
The Shanghai-based shipyard raised HK$14 billion after selling 1.75 billion shares at HK$8 apiece. The price was about 30 times this year's estimated earnings compared with 27 times for China Shipping Industry Co, the country's largest shipbuilder. The proceeds will be used to build dry dock as well as support offshore engineering projects.
An analyst at a domestic brokerage, who didn't want to be named, said Rongsheng hasn't won enough new orders to justify its IPO price.
Rongsheng CEO Chen Qiang said he is confident about growth in the shipping industry and expects the offshore engineering sector to grow sharply. He sees the firm to grow in the marine engineering and machinery equipment sectors as it diversifies its revenue stream.
After sailing through choppy seas in the past two years, shipbuilders are starting to win more new orders as a rebound in global trade is steering the industry to a recovery.
China's new shipbuilding orders nearly tripled in the first 10 months of this year to 54.6 million deadweight tons, the Ministry of Industry and Information Technology said on its website.
Rongsheng predicts profit at US$243 million this year, up 24 percent from last year.
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