China Industry Report: Apr. 1

Posted by Reading Time: 10 minutes

Apr. 1 – This is a regular series of relevant industry news from around China.

Marine transport, shipbuilding
• Hong Kong-based Orient Overseas (International) Ltd said on March 23 that it has ordered six container ships at South Korea’s Samsung Heavy Industries Co Ltd for a total US$816 million. The container shipper expects to pay for the vessels by securing bank financing and using internal resources.

The ships, each with a capacity of approximately 13,000 twenty-foot equivalent units, are expected to be delivered in 2013.

• The planned new-building output of China’s Jiangsu Province for 2011 stands at some 634 vessels with an aggregate capacity of 32.4 million dead weight tons, according to Asiasis.

The province is the country’s biggest shipbuilding hub in terms of capacity. The output of the shipyards in Jiangsu planned for 2011 is equal to 40 percent of China’s total and 20 percent of the global sector production.

Shipbuilding in the province has grown by 64 percent annually between 2005 and 2010.
In 2012, its shipyards are expected to deliver 398 vessels with an aggregate capacity of 28.32 million dwt.

• Hong Kong-based logistics company Sinotrans Ltd said on March 23 that its attributable profit rose 55.2 percent to US$ 94 million in 2010 as economic recovery backed business growth.

Earnings per share rose to US$0.023 from US$0.014. The company paid an interim dividend of US$0.003 and will propose a final dividend of US$0.003, which brings the total 2010 payout to US$25.96 million.

Revenue surged 54 percent on the year to US$6.51 billion in 2010, which brought about a 55 percent growth in operating profit to US$118.68 million.

The biggest contributor to the company’s revenue was freight forwarding with a turnover of US$5.49 billion, up by 59.2 percent on an annual basis due to an increase in volumes and higher sea and air freight rates.

Revenue from the firm’s marine transportation business improved 44.7 percent to US$657 million. Container shipping grew 19.7 percent to 2.21 million TEUs in 2010.

Turnover from storage and terminal services improved 21.5 percent to US$260 million.

Revenue from the company’s shipping agency services rose 18.2 percent to US$118.46 million. The volume of containers handled jumped by 21.3 percent to 12.26 million twenty-foot equivalent units, while bulk cargo increased 4.7 percent to 171.3 million tons.

• Japan’s Mitsubishi Heavy Industries Ltd, or MHI, said on Monday it has inked a deal with Chinese marine equipment maker Jiujiang Haitian Equipment Manufacture Co Ltd, or JHT, under which MHI will license marine boiler technologies to JHT.

JHT, an affiliate of China State Shipbuilding Corporation, intends to complete and deliver its first large-sized marine boiler in 2012.

Under the contract, MHI will license manufacturing, marketing and after-sale services for four types of marine boilers featuring evaporation capacities ranging from 2 to 55 tons per hour. Marine boilers are used to make steam necessary to drive cargo pumps in tankers, to serve as power source of propulsion systems, and to meet various inboard heat-energy needs such as heating and hot water supply.

• China Cosco Holdings, the flagship shipping company of Cosco Group, said on March 29 that the recovery of the global economy helped it emerge from the red into an attributable net profit of US$1.05 billion in 2010.

The company posted a loss of US$1.14 billion for 2009. Correspondingly, it booked earnings per share of US$0.103 for 2010 versus a loss per share of US$0.112 a year earlier. The management proposed a dividend of US$0.014 per share for 2010, or a total of US$140.42 million. No dividend was proposed back in 2009.

Revenue rose to US$14.73 billion in 2010 from US$10.47 billion a year earlier. The biggest contributor was container shipping with US$7.08 billion, up 68.3 percent on the year. Container shipping volume improved 18.7 percent to 6.2 million twenty-foot equivalent units (TEUs). Inflows from dry bulk shipping grew 19.8 percent to US$5.01 billion. The company’s logistics business registered a 25.4 percent increase to US$2.32 billion.

China Cosco Holdings said it expects the recovery of the global economy to continue through 2011 thus boosting container shipping volume. In its outlook for this year, the company said that it will focus on increasing its footprint in emerging markets and strengthening its business relationships.

• China Shipping Container Lines Company Limited said on Wednesday that revived demand for container shipping helped it return to the black in 2010 with a net profit of US$640.6 million against a loss of US$993 million a year ago.

Revenue rose to US$5.32 billion from US$3.01 billion. The company’s container shipping business registered a revenue of US$5.27 billion versus US$2.98 billion back in 2009 as the loaded cargo volume improved 6.9 percent to 7.21 million twenty-foot equivalent units (TEUs). Average freight rate per TEU for international trade lanes of the company rose 76.4 percent to US$1,086.

• Shipbuilder CSBC Corporation Taiwan delivered on Tuesday a coal carrier vessel to state-owned energy service provider Taiwan Power Company, or Taipower, local Central News Agency wrote. The ship is the first of four ordered by Taipower.

The vessel, with a capacity of 93,300 tons, has a length of 234.9 meters and a width of 38 meters.

Solar power
• Chinese solar panels maker Suntech Power Holdings Co Ltd said on March 21 it will establish a 10-megawatt solar power plant in Sangri county, Shannan prefecture, Tibet.

The installation, expected to be completed by mid-2011, will be located some 4,000 meters (13,0000 feet) above sea level. It will generate approximately 20,000 MWh of electricity a year to help facilitate sustainable economic development in Tibet, the company said.

• Chinese solar wafer maker LDK Solar reported a net profit of US$145.2 million, or US$1.09 per diluted ADS, for the fourth quarter of 2010, compared to a net loss of US$24.3 million, or negative US$0.22 per diluted ADS, a year earlier.

Net sales tripled to US$920.9 million in the last quarter of 2010 from US$304.6 million in the year-ago period. Gross profit was US$251.4 million, up from US$30.2 million for the fourth quarter of 2009. The gross margin improved to 27.3 percent from 9.9 percent.

For the first quarter of 2011, LDK Solar estimates its revenue to be in the range of US$800 million to US$850 million with wafer shipments between 610 megawatts and 660 megawatts and module shipments between 120 megawatts and 140 megawatts. The gross margin should be 27 percent to 29 percent.

For the entire 2011, LDK Solar expects revenue in the range of US$3.5 billion to US$3.7 billion, wafer shipments of 2.7 gigawatts to 2.9 gigawatts and module shipments of 800 megawatts to 900 megawatts. The gross margin is seen at between 24 percent and 29 percent.

• South Korean polysilicon producer OCI Co Ltd said it has won a polysilicon order worth US$217 million from Chinese monocrystalline wafer maker Comtec Solar Systems Group. Deliveries will be made through 2018.

Late last week, OCI announced it had received US$305 million in polysilicon orders from Taiwanese solar cell maker Neo Solar Power and South Korean machine components provider SKC Solmics.

• U.S. solar cell maker Natcore Technology said last Monday that it has agreed to sell its first intelligent antireflective (AR) coating processing station to Chinese solar power firm Hunan TLNZ Solar Technology Co Ltd.

Natcore expects the device to replace the currently used chemical vapour deposition process with the more environmentally friendly and cheaper liquid phase deposition technology that grows an AR coating on solar cells.

Natcore started the construction of the processing station in March and expects to complete the first production phase in eight to ten weeks. The device will be shipped to China after testing and possible adjustments.

Last year, TLNZ tested Natcore’s AR coating technology on solar cells and reached 15 percent efficiency of the cells. The result shows that the process is compatible with conventional silicon solar cell production technologies and can be integrated into existing production plants, Natcore said.

• Chinese Apollo Solar Energy Technology Holdings said on March 25 its solar equipment business helped it move to an attributable profit of US$151 million in 2010 after a loss of US$16 million a year earlier.

The company’s revenue jumped to US$444 million from US$92.23 million in 2009, boosted by a rise in revenues at its solar operations to US$388 million from US$40.54 million. Basic earnings per share amounted to US$0.032 compared with a loss per share of US$0.006.

For 2011, the company said that it will focus on the Chinese and Asia-Pacific markets and that it will boost its production capacity.

• U.S. chemical company Solutia Inc has agreed to acquire selected assets of Aimcore Technology Co, Ltd., a Taiwan-based conductive film maker, for some US$7 million.

The acquisition will result in greater manufacturing capacity for the production of Solutia’s Flexvue film components, which are used in touch screens, solar applications and e-readers, the company said last Thursday. The increased manufacturing capacity is slated to be online in the second half of 2011.

• Chinese photovoltaics company Solargiga Energy Holdings Ltd returned to the black in 2010 with a net profit of US$32.6 million, against a loss of US$14.99 million a year ago.

Revenue for the year rose 181.6 percent in annual terms to US$283 million as Solargiga’s sales volume and production capacity grew, driven by rising market demand.

Shipments of self-manufactured silicon solar ingots rose to 76.99 megawatts from 7 megawatts and those of wafers multiplied to 225.27 megawatts from 93.91 megawatts a year before. The volumes of processing silicon solar ingots and wafers were also higher at 25.94 megawatts and 6.46 megawatts, respectively, than the 10.6 megawatts and 2.09 megawatts in 2009.

By the end of 2010, the company’s manufacturing capacity for ingots, wafers and photovoltaic module components had reached 800 megawatts, 600 megawatts and 50 megawatts, respectively.

As of December 31, Solargiga had cash in bank and on hand of US$70.24 million, nearly doubling the US$36.09 million it had at end-2009. Net borrowings stood at US$30.91 million, compared to US$12.58 million a year earlier.

• Chinese polysilicon producer Daqo New Energy Corp on Tuesday commenced the construction of the second phase of its polysilicon production plant in China’s Xinjiang region.

Phase 2 of the plant will have an initial capacity of 3,000 tons of polysilicon and is expected to start commercial production in the second half of 2012.

The company expects to reach a total polysilicon production capacity of 4,300 tons in 2011.

• South Korean polysilicon producer OCI Co Ltd said on Tuesday it had received a US$908 million contract for polysilicon supply from Chinese Jingao Solar. Deliveries will be made between 2012 and 2018.

• China may double its 2015 target for installed photovoltaic capacity to 10 gigawatts, China Securities Journal writes, citing “some well-informed source.”

The country’s current plan is to have 5 gigawatts of working photovoltaic facilities by the end of 2015. According to the source, the new target is still being discussed.

Wind power
• Shanghai Electric Group Company Limited said on March 25 its efforts to cope with the volatile economic environment delivered for 2010 a 13.5 percent growth in net attributable profit to US$426.8 million.

Correspondingly, earnings per share went up to US$0.033 from US$0.030. The management will propose to distribute for 2010 a final dividend of US$0.010 per ordinary share, or US$127.59 million of the earnings. The company already paid out an interim dividend of US$115.36 million. By comparison, for 2009 the shareholders received a total US$112.31 million.

The company’s revenue improved 9.3 percent to US$9.62 billion. The biggest contributor, with some US$4.16 billion, was the company’s high efficiency and clean energy segment focused on thermal power and nuclear island equipment as well as power transmission and distribution equipment products.

The group’s industrial equipment division brought US$2.84 billion, up 13.6 percent on the year.

Shanghai Electric’s wind power operations registered a revenue of US$947 million, an increase of 55.1 percent on the year. The company added that its new energy segment will be one of its main priorities in the future.

• Chinese wind turbines maker Xinjiang Goldwind Science & Technology reported a 2010 net profit of US$349 million, up 31.16 percent on the year.

Basic and diluted earnings per share stood at US$0.151 compared to US$0.119 in 2009.

The company is to distribute a final dividend of US$0.052, up from US$0.015 a year back.

Goldwind manufactures wind turbine generators, provides wind power services and develops wind power projects. In 2010, the company’s revenue rose 63.83 percent year-on-year to US$2.67 billion as all three business segments experienced growth.

Sales of wind turbines were up by 64.34 percent in annual terms, bringing US$2.6 billion of revenue. Sales volumes jumped 96.84 percent to 4,006.75 megawatts.

At end-December the company had US$1.42 billion in cash and cash equivalents, compared to US$681 million a year ago.

• Chinese wind turbines maker Xinjiang Goldwind Science & Technology has agreed to acquire wind farm operator Beijing Xingqiyuan from China Three Gorges New Energy for US$17 million.

In a statement on Monday the company said the transaction would be carried by Goldwind’s wholly owned unit Beijing Tianrun, which develops wind power facilities.

Established in November 2004, Beijing Xingqiyuan has as a primary asset the Xingqiyuan Zhurihe wind farm, currently under construction. Phase I of the project, with a capacity of 49.5 megawatts, came online at the end of March, while phase II is expected to start operations in October 2012.

Beijing Xingqiyuan closed 2010 with a net loss of US$382,000 compared with a loss of US$42,324 a year earlier.

• China Suntien Green Energy reported on Monday a net attributable profit of US$43 million for 2010, up 68.2 percent on the year.

Basic earnings per share grew to US$0.019 from US$0.013. The company, which operates wind power plants and distributes natural gas, plans to pay a dividend of US$0.001 per share.

Revenue amounted to US$342 million, an increase of 47.8 percent in annual terms. China Suntien’s wind power business brought in revenues of US$78.84 million, or 95 percent more than in 2009, as a result of higher operating capacity and increased output.

At the end of 2010, the company had an installed wind power capacity of 1,103 megawatts, up by 82.3 percent over 2009.

• China Suntien Green Energy said on Tuesday it will acquire the 25 percent interest it does not yet own in HECIC Yanshan (Guyuan) Wind Power for US$7.1 million.

HECIC Yanshan owns a 49.5-megawatt wind farm in Hebei Province that started commercial operation at the beginning of 2010. At the end of 2010, HECIC Yanshan had net assets of US$27.55 million. In 2010 it made its first net profit, of US$3.02 million.

In addition to its wind power business, China Suntien is a distributor of natural gas.

• China WindPower Group Ltd said Tuesday it had agreed to sell US$114.4 million in guaranteed bonds maturing in April 2014. The bonds will carry a coupon of 6.375 percent per year and will be guaranteed by some of the company’s subsidiaries.

China WindPower will use the proceeds to cover general corporate needs, bolster its working capital and support wind farm investments.

HSBC has been appointed lead-manager and book-runner of the offering.

• Wind power components supplier China Wind Systems Inc said on Wednesday its net profit for the fourth quarter of 2010 grew by 16.6 percent on the year to US$3.1 million.

Diluted earnings per share stood at US$0.13, up from US$0.11 in the year-earlier period. Earnings before interest, tax, depreciation and amortization went up by 26.5 percent to US$5.5 million. The gross margin for the quarter remained nearly flat at 27.2 percent.

Fourth-quarter revenue amounted to US$22.5 million, up 41.5 percent year-on-year, driven by improved sales of forged rolled rings and related components sold to the wind sector and other industries and by the addition of the electro-slag remelting division.

Revenue from the sale of forged rolled rings exclusively to the wind power sector jumped by 76.5 percent to US$12 million and accounted for 53.6 percent of all sales.

For the full year 2010, China Wind Systems booked a net profit of US$11.1 million, or 45.5 percent more than a year before.

The gross margin increased to 26.3 percent from 24.2 percent, while revenue jumped to US$79.5 million from US$53.5 million on an annual basis.

This industry report brief is courtesy of AII Data Processing.