China Rongsheng Heavy Industries profit up 639%TO RMB1.22bn

The company continues to forge win-win relationships with strategic partners to maintain its long term growth.

China Rongsheng Heavy Industries Group Holdings Limited (“China Rongsheng Heavy Industries"), a leading heavy industries group in China, on Wednesday announced its unaudited interim results for the six months ended 30 June 2011.

During the first half of2011, the Group’s revenue was approximately RMB8.7 billion, a surge of 81.1% from RMB4.81 billion in the same period last year. Earnings attributable to equity holders of the Company surged by 639.0% to RMB1.22 billion. Gross profit margin increased significantly from 13.5% in the first half of 2010 to 23.2% in the first half of 2011.

Mr.Chen Qiang, Chief Executive Officer and Executive Director, said, “Our outstanding results performance in the first half of this year once again demonstrated the undoubtedly and immense growth potential of China Rongsheng Heavy Industries. During the period, earnings attributable to equity holders of the company reached RMB1.22 billion, six times over the same period last year. The continued significant revenue growth of the core business of the shipbuilding segment and the steadily emerging contribution from new marine engine building and engineering machinery business segments have enabled the Group to deliver promising returns to our shareholders. In terms of DWT, our new orders in the first half of the year accounted for 9% and 21% of global market and China market respectively. Orders on hand continued at the top position in China and fifth place globally measured by DWT. Benefiting from the rising market demand and the Group’s larger operating scale, we believe that the Group will continue to lead the domestic shipbuilding industry to the forefront of the global market”.

Addressing a potential economic downturn, the Group has adopted a differentiated strategy to ensure sustainable growth in a competitive market. The Group believes that forging win-win relationships with strategic partners is essential to its long term growth. This approach has benefitted the Group this year as it progressively obtained a considerable number of new orders. The Group has adjusted to market conditions through advantageous product development focusing on market segments that are likely to be only slightly affected by any potential downturn. The Group has been continuously moving up the industry value chain by building an order book with more high-value vessel types.

Mr. Chen Qiang added, “China’s growing demand for oil and gas has stimulated an upgrade of offshore equipment. We are aligning with the national energy strategy in the domestic market, and are actively bidding for domestic projects in accordance with established strategies. Meanwhile, we are cooperating with MAN Denmark in the field of dual-fuel diesel engines as we believe the demand for these engines is the market trend. Leveraging our technical strength and excellent performance of our products, we enjoy early-mover advantage as a market pioneer”.

China’s government-subsidized residence and hydraulic engineering programme implemented by the Central Government will push up the demand in the engineering machinery market. The Group’s expanded production capacity and sales network enable it to capture such growth.

Against the situation of tight monetary policy, the Group is continuing to enhance its strategic collaboration with financial institutions to sustain its continuous growth. In June 2011, the Group signed a strategic cooperation agreement with China CITIC Bank which granted it a total credit line of RMB11 billion. On 11 August 2011, with the guarantee of the Export-Import Bank of China, the Group secured a syndicated loan, with a facility credit of USD 220 million, from a syndicate led by the Crédit Agricole Corporate and Investment Bank. The Group also received a total credit line of RMB 28 billion from the Agricultural Bank of China on 18 August 2011.As at 23 August 2011, the Group has been granted a total credit line of over RMB 49 billion this year, accoridng to a China Rongsheng report.

Mr. Chen Qian concluded, “In the second half of 2011, the Group will capitalise on its integrated resources advantages to strengthen cooperation strategic partners such as financial institutions and actively respond to market changes , as it grows into a manufacturer focusing on value-added high-end equipment. Meanwhile, the Group will strive to enhance its management, improve efficiency, reduce costs and boost profitability and production capacity for expanding the Group’s businesses with the aim to transform China Rongsheng Heavy Industries into the world’s leading heavy industry group in the near future. In this way it will bring fruitful returns to shareholders while leading the heavy industry of China towards the global market”.