Shipyard set to list in Shanghai

GUANGZHOU Shipyard International is to list 126.47 million new A shares on the Shanghai stock exchange on Thursday.

The shipyard, which earlier this year became the third mainland company to list in Hong Kong, said subscriptions for the A shares, which are restricted to mainland investors, had closed on Tuesday. The listing was announced in China at the weekend.

Yangcheng, a firm of certified public accountants in China, has verified what the paid-up capital of Guangzhou Shipyard will be following the issue.

The company has also amended its records relating to its registered share capital.

The shipyard said its total share capital was worth 494.67 million yuan (about HK$663 million at the official rate) - 42.61 per cent of which represented 210.8 million state shares; 25.57 per cent, 126.47 million A shares; and 31.82 per cent, 157.39 million H shares issued in Hong Kong.

The A shares included 28.39 million shares issued to the shipyard's employees.

The group's audited combined profit after tax was 92.32 million yuan for the nine months to September 30.

Turnover was 577.33 million yuan and total assets were 1.54 billion yuan.

Shareholders' funds were put at 589.32 million yuan, current liabilities at 827.8 million yuan and long-term borrowings at 125.48 million yuan.

Shareholders' funds, as of September 30, did not include the net proceeds of about 645 million yuan received from the new issue.

The accountants warned that the financial information had been prepared according to China's accounting standards, rules and regulations and that the results might have been different had international or Hong Kong accounting standards been used.

According to a Vickers Ballas report, investors should focus their attention on Guangzhou Shipyard's Pearl River waterfront land that is within 30 kilometres of the centre of Guangzhou.

''While the company would emphatically deny any intention to release land for residential or commercial redevelopment, it is our contention that this is otherwise the case,'' the report says.

It says the property aspects of the shipyard were downplayed in its recent prospectus to protect the company from excessive speculation during the recent issue of H shares.

When Guangzhou Shipyard made its public offer in Hong Kong in July, its H shares were 76 times oversubscribed.

The company offered 145 million new H shares at $2.08 a share and placed another 12.3 million. Total proceeds were $307 million.

Investors have been attracted to Guangzhou Shipyard because its container business is set in the heart of the most bustling region in the country.

The export-led growth of Guangdong has increased potential demand for containers, and Guangzhou Shipyard has been expanding to meet it.

Its Kwangchow Shipyard Container Factory subsidiary was set up in 1980. By 1988, container production had risen to 15,000 twenty-foot equivalent units (TEUs). Using a two-shift system, the group will soon be ready to make about 36,000 TEUs a year.

Turnover from shipbuilding last year rose from 175 million yuan, 30 per cent of the total, to 441 million yuan.

Container output fell from 357 million yuan, 61 per cent per cent of the total, to 322 million yuan.

Directors have warned that container profits this year are expected to fall by 20 per cent as a result of the restructuring of the company.