Friday, December 14, 2012

[Ship Building] China factor to stimulate orders

China factor to stimulate orders

Expected recovery of China's economy would lead to growing newbuilding investment.

Analyst Lee Kang-Rok of KTB Investment & Securities said "China's industrial production has exceeded market consensus in November, by having increased by 10.1% year-on-year,"

He added "which affected shipbuilding industries saw 5.4%p increase from earning rate of stock market."

Lee explained that economic recovery in China would result in increasing steel demand, improving iron-ore volume and recovery of bulker market. This will eventually end up with placement of newbuilding orders.

Looking at precedents, about three months after China's industrial production spike, newbuilding orders usually increased, he said.

Lee recommended Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering as Top Picks in shipbuilding segment. He explained "With comparatively short backlog against competitive shipyards, it will make an aggressive sales activity in 2013."

And added "In case of Daewoo, as proportion of offshore plant under construction is to rise in 2013, its earnings will start to improve. And the company is predicted to win orders more than $10bn next year."

Published : December 13, 2012

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