Rongsheng Industries goes offshore
China Rongsheng Heavy Industries Group Holdings is diversifying from its core shipbuilding business to offshore engineering, marine engines and machinery, after reporting double-digit growth last year.
Rongsheng, the largest private Chinese shipbuilder, raised HK$14 billion by listing in Hong Kong in November, the fourth-largest IPO in Hong Kong last year.
'Marine engine and offshore engineering will be our growth drivers in future. Engineering machinery is our emerging business segment,' Rongsheng said.
Offshore engineering has been listed in China's 12th five-year plan and positioned as a key emerging industry supported by the government, said Rongsheng. 'While focusing on shipbuilding, we are following the national strategy and broadening our business into offshore engineering.'
As part of its offshore engineering business, Rongsheng said it will participate in the government's 'South China Sea Exploration Strategy' and provide state-owned oil majors like CNOOC with equipment.
Rongsheng plans to increase the revenue contribution of offshore engineering and marine engines to 50 per cent in five years, from less than 10 per cent at present, said a Citic Securities report.
'Rongsheng is looking to transform from a pure shipbuilder to a heavy industries major. Over the next two years, we expect to see non-shipbuilding earnings increase from less than one per cent in 2010 to 26 per cent in 2012,' a JP Morgan report said.
Shipbuilding accounted for 91.4 per cent of Rongsheng's revenue last year, when the company gained US$2.26 billion of shipbuilding orders for 46 ships weighing a total of 5.7 million deadweight tonnes.
Revenue grew 33.7 per cent to 12.67 billion yuan last year, while net profit rose 32 per cent to 1.72 billion yuan. Rongsheng's profit and revenue in 2010 exceeded the forecast of JP Morgan but fell below the estimates of Citic Securities. Rongsheng will pay a final dividend of 0.068 yuan per share for 2010.
