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Cruising with the ship ..Yangzijiang

China: Shipbuilding industry struggles to keep head above water

Monday, 14 October 2013 | 00:00Chinese shipbuilders have been sailing toward bankruptcy in recent years, with China trying to consolidate the industry and bail it out from the woe of overcapacity.With delays in deliveries, order cancellations and price decreases for newly-built vessels, shipbuilding firms have been in a slump since late 2008, when the global financial system was in free fall.Cash-strapped shipping companies froze expansion plans by scrapping or delaying orders. The euro crisis from late 2009 made the situation even worse.Statistics from China Association of National Shipbuilding Industry showed in the first half of 2013, 80 major enterprises made a combined business revenue of 120.3 billion yuan (19.6 billion U.S. dollars), down 18.5 percent year on year. Total profit dropped 53.6 percent to 3.58 billion yuan.In terms of production, it is estimated there will be a fall of around 50 percent in 2013, according to a Ministry of Finance report in August."The color of the industry was gray in 2011. It was black last year. For this year, it's red, bloody red," said Chen Qiang, president of Rongsheng Heavy Industries Group Co., China's largest private shipbuilder. Operating revenue for 2012 at the company stood at 7.9 billion yuan (1.29 billion U.S. dollars), down 50 percent year on year.China's shipbuilding industry was in a "golden age" in 2004, when shipyards, especially those with private investment like Rongsheng, mushroomed as a symbol of the country's booming economy.Before 2000, the number of shipyards in China were in the hundreds. The industry quickly ballooned to more than 3,000 by 2007 under a "get-rich-quick" mindset. China entered the world's top three in terms of shipbuilding, together with Japan and the Republic of Korea (ROK).Now, the industry is a shadow of its former self.Though bankruptcies remain rare despite mounting losses even at well-connected state-owned firms, many are teetering on the brink.In eastern China's Jiangsu Province, the country's largest ship builder, companies have been warned that if there are no new orders, the backlog will merely be enough to "feed" enterprises for another two years.According to the provincial commission of economy and information technology, ship completion and current orders in Jiangsu dropped by 32.9 percent and 17.5 percent year on year respectively in the first half of 2013. Among 66 shipbuilding enterprises, only 23 received new orders.Even those with orders are not positive."Profit margins are already razor thin as prices are being pushed down," said Tang Yong, chief financial officer of Dayang Shipbuilding Co., Ltd. in Yangzhou.The price for a new ship is the lowest in a decade, said Tang.Many firms are not willing to go out of business, as China lacks a bankruptcy mechanism to allow creditors to be compensated. Many believe the one that sticks it out stays alive."The industry itself is a ship so bloated that a slimming plan is in dire need to shift it in the right direction," said Song Songxing, a business management professor with Jiangsu-based Nanjing University."If not, low-end products will continue snowballing until it drags down the whole industry," said Song.Li Yanqing, director of China Shipbuilding Information Center, said low value-added products like bulk carriers, oil tankers and container ships, dominated shipyards. Li said Chinese shipbuilders were far behind Japan and the ROK in production management, work efficiency and developing high value-added products for ocean engineering projects."Chinese ship builders are competing fiercely with each other on the easy-to-make-but-cheap products, while few are willing to invest in the development of high-end products, which is no good for the long-term health of the industry," said Li.SIGNPOST ON THE SEAThe central government has also identified the need for deeper structural reform to remedy the inefficient and debt-laden industry.The State Council, or China's cabinet, issued a three-year plan to consolidate the industry in August, which includes measures to halt approvals for new shipbuilding projects and freeze credit support for expansion of facilities.Meanwhile, the cabinet has vowed to prioritize the development of ocean engineering products, for example deepwater drill ships and rigs, which there is a rising global need for as the world seeks energy resources from the sea.Chinese yards are trying to tap into the ocean engineering market, as advance payments and more bank credit are available.Chang Jianhua, Rongsheng's vice president, told Xinhua in August that the company plans to accelerate development of ocean engineering products, which is estimated to bring 40 percent of firm's total income by 2015.By then, the profit margin of Rongsheng's shipbuilding business is expected to rise to 20 percent from the current 5 to 10 percent. "The more difficulties, the more opportunities," said Chang.However, ocean engineering products demand high technology, which is an achilles' heel for the country's shipbuilders, especially private yards, said Ni Tao, general manager of the China Ocean Shipping Company."That's why most Chinese firms are subcontractors or co-builders in the international ocean engineering market," said Ni. "We need government support to develop ocean engineering products based on home-grown technology."Rongsheng invested heavily in a new research and development (R&D) hub in Singapore last year besides having one in Shanghai. It wants to combine foreign know-how with Chinese national identity to guarantee a sustainable revival."Traditionally, Singapore is a talent pool for ocean engineering product development and management. We set up the new R&D center there, which allows Rongsheng to speed up the product-development cycle," said Chen Qiang.Experts, however, warn that the government should stop micromanaging the industry while it upgrades. Instead, it should try to ensure the market runs smoothly by establishing a level playing field and stronger rules."To develop ocean engineering products is the right direction, but local governments should learn lessons from last time, when they blindly gave policy support to build new yards more than what were needed," said Song.Source: XinhuaNext articleBack to listPrevious

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Personally, I don't feel that China Credit and property is having bubble, and it is still under well control by the China government. But the US debt ceiling can post a treat to China existing problem, which might turn it into uncontrollable situation. China as the major debt holder will be seriously affect if US really default.

dippyboy      ( Date: 15-Oct-2013 03:12) Posted:   China credit and property bubble is very serious and my opinion is that it will burst rather soon within the next few years depending on whether the govt postpones it with monetary policy or take the pill now. All these wealth management product which has   just been restricted from selling now and replaced with asset managment products plus the stalling real estate price is an indication of the end of unlimited credit and ponzi finance which marks the beginning of the end of the bubble. Exactly when it burst is anybodys guess .Joe zhang a veteran china shadow banker had written a book on the insider account of shadow banking which i recommend reading. The latest revelation of company director Yu Kebing taking the opportunity to dump his entire 55m shares during the recent 50% pushup of the stock is as clear a warning as it gets. All the upside is already priced in but not the downside. My price target < 28cents when the HTM bomb implodes. All other news is immaterial relative to the size of that. Good luck.

 

  China credit and property bubble is very serious and my opinion is that it will burst rather soon within the next few years depending on whether the govt postpones it with monetary policy or take the pill now. All these wealth management product which has   just been restricted from selling now and replaced with asset managment products plus the stalling real estate price is an indication of the end of unlimited credit and ponzi finance which marks the beginning of the end of the bubble. Exactly when it burst is anybodys guess .Joe zhang a veteran china shadow banker had written a book on the insider account of shadow banking which i recommend reading. The latest revelation of company director Yu Kebing taking the opportunity to dump his entire 55m shares during the recent 50% pushup of the stock is as clear a warning as it gets. All the upside is already priced in but not the downside. My price target < 28cents when the HTM bomb implodes. All other news is immaterial relative to the size of that. Good luck.

 

 

Oh look, the spammer is back.

 

 

I took profit at 1.095 and didn't board no matter how fierce it went up. If u check back yzj always have positive quarterly report and I bet it will be good this time round. But how can a company be so positive all the time. Don't dare take the debt but RSI should be overbought now.

In general, 2 -3 weeks before announcement sure goes up but nearer to the date can see correction.

Anyway I still wish to buy at nob or dec when tapering starts

 

Profit taking Friday and weekend break .........:)

 

To be continue on Monday............. 

 

1.175....need to break it .....arghh...

 

sorry bro oldbird....i dunno...

 

1.17$ currently....

 

Bro ascend, do u know what % of YZJ shares are floated?

ascend88      ( Date: 10-Oct-2013 15:04) Posted: i wonder....those bro...that took profit 1-2 weeks ago....reboard the ship yet ?

 

i wonder....those bro...that took profit 1-2 weeks ago....reboard the ship yet ?

 

 

14:59:16 1.165 15,000 A

14:58:48 1.165 79,000 A

 

curise ship is resting at 1.16/1.165 ....waiting for SSE to close...and how HSI perform....

 

All Yellen need to do is to call up the printers to work overtime..not a big deal to fix recession...

ascend88      ( Date: 10-Oct-2013 14:48) Posted: Yellen... will just print more US$.....hahahaha.... print shop stay opens.....horray Oldbird      ( Date: 10-Oct-2013 14:43) Posted: Of course it will affect China, as US is china second trading partner...second to EU. The wayang show will soon over once those actors are tired of acting ...do not think US will go into recession...

 

Yellen... will just print more US$.....hahahaha....

print shop stay opens.....horray

Oldbird      ( Date: 10-Oct-2013 14:43) Posted: Of course it will affect China, as US is china second trading partner...second to EU. The wayang show will soon over once those actors are tired of acting ...do not think US will go into recession... Tomique      ( Date: 10-Oct-2013 14:30) Posted: Actually I don't know if the US economy really can affect Asian economies including China's. Though US is the biggest economy in the world, it is fast being overtaken by China, so basically it won't be too bad for Singapore market.   The case of US in deep recession might hurt us a little, but I think not much since it is always living on borrowed time, borrowed money and American dreams.   Singapore does not borrow money, it infact lends out money to the world.   It also gives out free money sometimes to poor countries. Just as our Law Minister recently stated in the Apac summit, we are always ready to help the other poor countries to develop.   Sg market will not be that bad if anything bad happens to the US.

 

Of course it will affect China, as US is china second trading partner...second to EU.
The wayang show will soon over once those actors are tired of acting ...do not think US will go into recession...

Tomique      ( Date: 10-Oct-2013 14:30) Posted: Actually I don't know if the US economy really can affect Asian economies including China's. Though US is the biggest economy in the world, it is fast being overtaken by China, so basically it won't be too bad for Singapore market.   The case of US in deep recession might hurt us a little, but I think not much since it is always living on borrowed time, borrowed money and American dreams.   Singapore does not borrow money, it infact lends out money to the world.   It also gives out free money sometimes to poor countries. Just as our Law Minister recently stated in the Apac summit, we are always ready to help the other poor countries to develop.   Sg market will not be that bad if anything bad happens to the US.  moneycow      ( Date: 10-Oct-2013 11:12) Posted: US default news though unlikely is scaring investors. Its creating obstacles for stocks to fly............ its blocking the advancement.......... Just when US economy have clearer signs of advancing..this one shooting its own leg. Their parliament too democratic .......2 party Government system can cause such halt in programs................ Just tahan the funding approval..............world stock market shakes...................  Once Obama and   Republicans come to some sort of firm agreement....... the barb wire will be remove............ Since Euro's economy improving also................ Asia is a destination of huge growth lead by China..................... USA Uncle Sam shooting its own leg how stupid ?    As can see 2 party system type of Gov, one side can pull string.............threaten other side   to drown the country if they cannot agree on certain issues...

 

H.....u......a......t........A......h

 

14:33:36	1.160	291,000	A
14:33:33	1.160	409,000	A
14:33:33	1.160	377,000	A

Oldbird      ( Date: 10-Oct-2013 11:59) Posted: S.......low.......n....s............tea..............dy...... Win......................de..... ascend88      ( Date: 10-Oct-2013 10:39) Posted: if can break.....next my TP....1.20

 

Actually I don't know if the US economy really can affect Asian economies including China's.

Though US is the biggest economy in the world, it is fast being overtaken by China, so basically it won't be too bad for Singapore market.   The case of US in deep recession might hurt us a little, but I think not much since it is always living on borrowed time, borrowed money and American dreams.   Singapore does not borrow money, it infact lends out money to the world.   It also gives out free money sometimes to poor countries. Just as our Law Minister recently stated in the Apac summit, we are always ready to help the other poor countries to develop.   Sg market will not be that bad if anything bad happens to the US. 

moneycow      ( Date: 10-Oct-2013 11:12) Posted: US default news though unlikely is scaring investors. Its creating obstacles for stocks to fly............ its blocking the advancement.......... Just when US economy have clearer signs of advancing..this one shooting its own leg. Their parliament too democratic .......2 party Government system can cause such halt in programs................ Just tahan the funding approval..............world stock market shakes...................  Once Obama and   Republicans come to some sort of firm agreement....... the barb wire will be remove............ Since Euro's economy improving also................ Asia is a destination of huge growth lead by China..................... USA Uncle Sam shooting its own leg how stupid ?    As can see 2 party system type of Gov, one side can pull string.............threaten other side   to drown the country if they cannot agree on certain issues...

 

sell when miss Kim Eng ask you to buy lol...

moneycow      ( Date: 10-Oct-2013 12:06) Posted: seller if wants to take profits shuld ask for 1.165 ....1.17...1.175.......1.18....1.185................etc etc ...........

 

seller if wants to take profits shuld ask for 1.165 ....1.17...1.175.......1.18....1.185................etc etc ...........