HK listing possible: Jiaolong

PUBLISHED : Tuesday, 27 November, 2007, 12:00am
UPDATED : Tuesday, 27 November, 2007, 12:00am

Jiangsu Jiaolong Heavy Industry Group, a marine steel structure producer that will issue about 1.5 billion yuan worth of new shares in Shanghai, has yet to rule out the possibility of listing in Hong Kong.

The company, which produces 80 per cent of global large-scale hatch covers, also specialises in developing and producing hull segments and large-scale steel-structure parts.

'We would like to diversify our product range into maritime resource engineering such as offshore oil rigs and offshore power plants,' said chairman Xu Guohua at an industry conference in Tongzhou where the firm was founded in 2004. 'More technologically advanced products have greater demand.'

The country is the world's third-largest shipbuilding nation in terms of vessel completion but the percentage of high-end products is relatively low, making the profit margin of mainland shipyards much lower than that of their counterparts.

'High-end vessels could be at a premium of two to five times the price of general ships,' said Zhang Weijing, a professor at Shanghai Jiao Tong University. 'That's why the combined profit of shipyards in China is lower than that of one major shipyard in Korea.'

Jiaolong expects to double its annual capacity to 400,000 deadweight tonnes and increase its sales to four billion yuan by 2010 from the two billion yuan this year. The company's production volume will double to 200,000 dwt this year from a year ago.

Mr Xu said the company was the largest taxpayer among shipyards and ship engineering plants in Tongzhou. Tongzhou has 114 shipbuilding and steel structure companies with 400,000 workers. By 2010, ships finished in Tongzhou will reach two million dwt and steel structures to three million dwt, the Tongzhou government estimates.

The Bank of China and China Agricultural Bank are sponsors of Jiangsu Jiaolong's listing.