Shipbuilder in venture with US steelmaker
GUANGZHOU Shipyard International has taken a 49 per cent stake in a joint venture making steel structures with Havens Steel of the United States.
Zeng Yixin, director of the company's investment department, said steel structure projects usually captured a higher profit margin than earned by its core businesses of shipbuilding and container manufacturing.
For instance, he said the profit margin on the Sanshanxi Bridge project in Nanhai was as high as 20 per cent.
With the Humen Bridge project in Guangdong - worth 170 million yuan (about HK$152 million) - on hand, he said Guangzhou Shipyard intended to bid for a steel structure project in Hong Kong.
Havens will hold the remaining 51 per cent stake in the joint venture, which will involve an initial investment of US$9.3 million.
He said the venture would not confine its business to the mainland and would look for opportunities overseas, capitalising on Havens' market exposure.
With a the capacity to manufacture 45,000 tonnes of factory and building steel structures, he expected the venture to be in operation next May and to begin contributing in 1996 and 1997.
Meanwhile, as the first H-share counter to announce interim results under China's new regime of a unified exchange rate, analysts have a mixed view of how well Guangzhou Shipyard has performed in the first six months.
''The result is good, but interpretation is difficult,'' said Anna Ho, an analyst with Swiss Bank Corporation. ''We find there is a significant improvement in operating profits and a slight improvement in profit margins.'' Ms Ho said part of the income arising from the disposal of foreign exchange entitlements, which was included as pre-tax profits of continuing operations, should be deducted from both 1993 and 1994 figures as they did not come from current operations.
But how much of the income from foreign exchange entitlements should be deducted was quite arbitrary, Ms Ho said.
''We expect the company will do even better in the second half than in the first half.'' She expected Guangzhou Shipyard International to have full-year profit of 134 million yuan, an increase of 27 per cent from 105.52 million yuan a year ago.
For the first six months, Guangzhou Shipyard had income of 14.25 million yuan from the sale of foreign exchange entitlements. In the previous corresponding period, the income amounted to 53.20 million yuan.