Hong Kong: Investors ultimately reacted coolly to Chinese shipyard Rongsheng’s resumption of stock trading today, its share price finishing the day down 4% to HK$0. 72. The day before the bust shipbuilding group had announced it was selling its shipbuilding division to a fellow Chinese company, thought to be Yangzijiang Shipbuilding, and Rongsheng would now focus on energy projects. The change in focus also brings a change in name, Rongsheng announcing last Friday it would rebrand as China Huarong Energy Company.
It had ceased trading on the Hong Kong Stock Exchange on March 11 pending the asset sale news. Rongsheng has been listed in Hong Kong since November 2010, its stock price steadily falling almost from day one when its IPO traded at HK$8 a share.
In early trading this morning it appeared investors liked the restructuring news, the share price jumping 12% to hit HK$0.84 before fading in the afternoon.
Commenting on the rise and fall of Rongsheng, once China’s largest private shipbuilder, Matthew Flynn, managing director of online shipbuilding database, Worldyards.com, told Splash: “Rongsheng was a brave effort initiated perhaps with grand intentions. Yet, the cruel reality of shipbuilding economics demonstrates that ambition and scale are not enough.”
“Developing into the energy sector is the necessary road we have to take, the new sector will hopefully bring a rebirth to the company, and the energy sector remains essential in the national economic strategy,” Lei Dong, a spokesperson for Rongsheng, told local media.
Confirmation of Yangzijiang’s takeover of Rongsheng – in consort with a trio of three Chinese banks – is expected later this week.