China State Shipbuilding Co, the largest mainland shipyard, said yesterday that its net profit surged more than 11-fold last year due to an increase in vessel orders and the acquisition of shipyards from its parent company.
The Shanghai-based shipyard predicted its net profit for last year would increase up to 11.5 times compared with 297.5 million yuan in 2006, in a filing with the Shanghai Stock Exchange yesterday.
Previously a heavy-duty engine maker, the company acquired two Shanghai-based shipyards from its parent, China State Shipbuilding Corp last July, making it an integrated shipbuilding conglomerate. The boost in profit was mainly due to its takeover of Shanghai Waigaoqiao Shipbuilding Company and a 65 per cent interest in Jiangnan Changxing Shipbuilding last year.
Shares in the company rose 1 per cent to 216.83 yuan yesterday.
The increase in dry bulk freight rates [early last year] has driven up demand for dry bulk vessels and filled the shipyards' order books until 2012, a transport analyst said. 'The outlook for 2008 is good, but since dry bulk vessels will be in oversupply in 2009, shipowners may trim down orders next year.'
Shipyard stocks have plunged for more than a month over uncertainty about the growth of order books for next year. Shares in China State Shipbuilding dropped 13 per cent last month. Shares in Korea's Hyundai Heavy Industries fell 29 per cent last month to 312,000 won.