Shares of Guangzhou Shipyard International, which builds small tankers, soared for the second consecutive day yesterday on investor anticipation of an injection of larger commercial shipyards by its parent company, China State Shipbuilding Corp (CSSC).
Guangzhou Shipyard's Hong Kong-traded shares rose 16.09 per cent to HK$26.70, extending a 25 per cent jump on Wednesday, after reports from Morgan Stanley, CLSA and other brokerages speculated on the likelihood of an asset injection. Its A shares in Shanghai rose the daily maximum 10 per cent to 27.59 yuan.
Neither the company nor CSSC would confirm the report. 'I cannot comment on assumptions,' said a CSSC spokesman yesterday.
'We haven't heard anything regarding the asset injection,' said an official from the investor relations department of Guangzhou Shipyard. The firm's spokesman could not be reached for comment.
Casting doubt on the likelihood of an injection is a January 29 joint announcement by CSSC and its subsidiary, Hudong Heavy Machinery, that Hudong would be the platform for CSSC's core civil shipbuilding assets.
What is concrete from the Morgan Stanley report is that Guangzhou Shipyard is likely to relocate its shipyard next year. '[Guangzhou Shipyard] is located on the riverside of Pearl River, close to the centre of Guangzhou. With rising property prices as well as infrastructure construction for the 2010 [Asian] Games, the local government has a strong incentive to relocate Guangzhou Shipyard,' it said.