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Rongsheng anticipates doubling of '09 profit

Rongsheng anticipates doubling of '09 profit

Shanghai: Jiangsu Rongsheng Heavy Industries Co, China's biggest privately-owned shipbuilder, expects revenue and profit to double this year from last year, writes Reuters quoting the company's president Chen Qiang.

Chen did not provide sales and profit figures for last year and would not comment on the progress of the shipbuilder's listing plans.

Rongsheng, backed by foreign funds including Goldman Sachs and U.S. fund D.E. Shaw, is seeking to tap capital markets via an initial public offering of up to $2 billion to fund growth and compete with bigger state-owned rivals including Guangzhou Shipyard International Co.

But investors have turned cautious about the sector as the global shipbuilding industry has been dealt a heavy blow by the economic downturn, whith orders shrinking.

China's new shipbuilding orders shrank 96% in the first five months this year to 1.18m dwt from the same period last year, statistics from the Ministry of Industries and Information Technology showed.

Chen said he expected demand for new oil tankers to pick up.

"The oil tanker sector is likely to be the first to recover because crude prices have risen and that should boost demand for tankers," Chen told Reuters in an interview after the company signed a $484 million contract to build four ships for Oman Shipping Co.

But it could take another two years for the market for container ships to see any improvement, he said.

Rival Guangzhou Shipyard posted a near 50% drop in first-quarter net profit this year and called off a proposed $445m acquisition of a shipyard from its state-owned parent in March as its share price had slumped.

Beijing has announced plans to encourage qualified shipbuilders to list shares and issue bonds and has asked banks to step up trade financing for exports of ships to bolster the industry.  [08/07/09]