Recession in the Chinese shipbuilding industry still continues.
CSSC Jiangnan Heavy Industry Co., Ltd., (SHSE: 600072), a listed arm of China State Shipbuilding Corp. (CSSC), released financial for the third quarter of this year on October 28 and according to the results, the operating revenue reached CNY 583 million, down 18.25 percent from CNY 713 million a year earlier and compared to the operating cost of CNY 684 million. The net loss hit about CNY 94.8 million, up 3,678.03 percent from CNY 2.51 million a year ago. The notes payable and the accounts payable each fell 96.73 percent and 38.72 percent from the previous year.
It mainly attributed the poor performance to dropped sales revenue and gross margin. Besides, recession in the ship market and the large-sized steel structure one caused it to gain less orders. In the meantime, the order price continued falling. It forecasted that it would report a loss-making operation for the whole year.
In line with industry observers, there will be little possibility for it to bring the loss-making operation to an end within this year. Chen Hui, secretary of the board of it, declined to make a comment on this, adding that she had nothing new to reveal.
People in the know disclosed that 17 firms under CSSC owed it a total of CNY 147 million and the capital accounted for about 25 percent of the operating revenue it reaped in the first three quarters of the year. Days of it would be harder provided that the sister firms failed to pay back the debts. Its cash flow had been negative and the bank loans that would mature within one year rose 60 percent in the meantime. In addition, it would see term of part of CNY 100 million long-term loan expire within one year. The interest it should pay surged up by 79.8 percent to CNY 11.94 million, too.
The insider reiterated that it booked a loss of CNY 76.05 million for the fiscal year 2012 and if the loss-making operation continued this year, it would be specially traded by the Shanghai Stock Exchange. And by then, it would become the first shipbuilder in the market to be specially traded by the bourse.
He added that it saw share price reach about CNY 11.3 currently, compared to a record high of CNY 63.97. China CSSC Holdings Ltd. (SHSE: 600150) is also a listed arm of CSSC and one saw share price hit CNY 300. However, the share price hit only about CNY 17.31 currently.
