Guangzhou Shipyard International’s shares fell 2.5% in Hong Kong in the morning trading session today after the company forecast a decline in 2008 combined net profits of its own and its acquisition target Guangzhou Wenchong Shipbuilding.
The south China-based handysize tanker specialist estimated a net profit of Yuan1.5bn for the full year of 2008 should the takeover of Wenchong Shipbuilding be completed this year.
Although the estimate represents a 54% increase from the company’s own net profit of Yuan939m last year; it shows a 7.5% decrease should the profit contribution from Wenchong Shipbuilding be taken into account in last year’s figures.
The Company’s share price has lost 24% since it first announced the plan to take over Wenchong Shipbuilding for Yuan3.1bn on June 30. Guangzhou Wenchong Shipbuilding is a handysize boxship and dredger manufacturer controlled by GSI’s parent China State Shipbuilding Corp.
The fall in GSI’s shares was partly caused by the expectation of a more difficult market environment announced by the firm’s management last week.
Chief accountant Zeng Xiang-xin said in Hong Kong last Monday that “the domestic shipbuilding industry as a whole had enjoyed relatively high gross profit margins in recent years, which cannot be expected to be sustained, there is bound to be a process of downward adjustment.”
Mr Zeng also said that a 15% gross profit margin would be acceptable for this year while making reference to the company’s own gross margin of 20% last year.
The south China-based handysize tanker specialist estimated a net profit of Yuan1.5bn for the full year of 2008 should the takeover of Wenchong Shipbuilding be completed this year.
Although the estimate represents a 54% increase from the company’s own net profit of Yuan939m last year; it shows a 7.5% decrease should the profit contribution from Wenchong Shipbuilding be taken into account in last year’s figures.
The Company’s share price has lost 24% since it first announced the plan to take over Wenchong Shipbuilding for Yuan3.1bn on June 30. Guangzhou Wenchong Shipbuilding is a handysize boxship and dredger manufacturer controlled by GSI’s parent China State Shipbuilding Corp.
The fall in GSI’s shares was partly caused by the expectation of a more difficult market environment announced by the firm’s management last week.
Chief accountant Zeng Xiang-xin said in Hong Kong last Monday that “the domestic shipbuilding industry as a whole had enjoyed relatively high gross profit margins in recent years, which cannot be expected to be sustained, there is bound to be a process of downward adjustment.”
Mr Zeng also said that a 15% gross profit margin would be acceptable for this year while making reference to the company’s own gross margin of 20% last year.