 Shipyard shares down on acquisition concern
(China Daily)
Updated: 2008-07-02 07:47  Guangzhou Shipyard International Co fell as much as 8.9 percent in Shanghai trading on concern earnings per share may be diluted by a stock sale to fund the purchase of affiliate Guangzhou Wenchong Shipbuilding Ltd. The shares, down 71 percent this year, fell 6.8 percent to close at 23.54 yuan on the Shanghai Stock Exchange. The Hong Kong market, where the stock also trades, was shut for a holiday. The purchase of the Wenchong yard from parent China State Shipbuilding Corp will allow Guangzhou Shipyard to double production capacity and expand into smaller container vessels. Guangzhou Shipyard will offer shareholders three shares for every 10 held, according to Guangzhou Shipyard's statement to the Hong Kong and Shanghai exchanges yesterday, without giving a price. "Guangzhou Shipyard chose the wrong timing for a stock sale, when the overall demand for stocks is waning amid the bad market sentiment," said Sun Chao, an analyst at CITIC Securities Co in Shanghai.
China State Shipbuilding Corp, the nation's biggest, plans to sell Wenchong, also based in Guangzhou, for 3.4 billion yuan, according to a June 27 statement. Guangzhou Shipyard, a maker of handysize tankers, will use Wenchong to expand its product offering in the class to include container ships and specialty vessels. Handysize ships range in size from about 10,000 deadweight tons to about 30,000 deadweight tons. Guangzhou Shipyard will allot as many as 101 million yuan-denominated A shares and 47.2 million Hong Kong dollar denominated H shares through the offer, the company's statement said. Shareholders will vote on the plan before Aug 20. The subscription price is subject to approval by the China Securities Regulatory Commission, it said. Guangzhou Shipyard's statement also proposed changing the company's name to Guangzhou CSSC International Co. Wenchong Shipyard makes container ships able to carry as many as 1,700 20-foot containers and bulk carriers capable of bearing 27,000 deadweight tons, according to its website. The yard can build eight ships and repair 140 vessels a year, it said. Guangzhou Shipyard makes oil and chemical tankers as large as 60,000 deadweight tons, according to its website. Wenchong Shipyard had a profit of 626 million yuan and sales of 3.19 billion yuan in 2007, the filing said, without giving year-earlier comparative figures. Guangzhou Shipyard's 2007 net income was 939 million yuan, it said on March 19. Agencies  (China Daily 07/02/2008 page15) |
