Hengli Group Expands Shipbuilding Business, Receives 66 New Ship Orders, Considering IPO Pursuit

Hengli Group Expands Shipbuilding Business, Receives 66 New Ship Orders, Considering IPO Pursuit

China's Hengli Group, a well-known enterprise, is actively expanding its shipbuilding business. As of mid-June 2024, Hengli Shipbuilding has received 66 new ship orders, totaling 8.31 million deadweight tons, demonstrating its strong momentum in the shipbuilding industry. These orders are mainly concentrated in the dry bulk carrier sector, where the construction difficulty is relatively low.

To further expand its capacity, Hengli Group launched the second phase of Hengli Shipbuilding on Changxing Island, Dalian, with a total investment of over 11 billion yuan on August 15. This project includes not only traditional shipbuilding but also high-value-added green ships and high-end marine equipment manufacturing. Once completed, Hengli Shipbuilding is expected to possess a strong production capacity of 1.8 million tons of processed steel and an annual output of 7.1 million deadweight tons.

Moreover, Hengli Group plans to list these shipbuilding assets, which is an important step in its business strategy. Through these measures, Hengli Group not only enhances its competitiveness in the shipbuilding industry but also lays a solid foundation for future development.

Experts note that Hengli's aggressive expansion aligns with broader trends in the Chinese shipbuilding industry, which is experiencing a resurgence, driven by increased demand for energy-efficient vessels. Chinese shipbuilders, including Hengli, are benefiting from a favorable market environment, with newbuilding orders up significantly in 2024, particularly in the tanker and container ship sectors.

Hengli's revitalization of the former STX Dalian shipyard into a hub for green shipbuilding and marine engineering also underscores its commitment to innovation and sustainability. The group plans to list its shipbuilding assets, further solidifying its presence in the market and laying a foundation for long-term growth. This move highlights Hengli's ambition to become a key player in the global shipbuilding industry, leveraging its experience in petrochemicals and heavy industries to support its shipbuilding ventures.

Hengli Group is currently considering spinning off its shipbuilding business and pursuing an IPO in Hong Kong. The company is in the early stages of discussions with financial advisors and aims to raise approximately $100 million through this potential listing. This move aligns with Hengli's broader strategy to expand its presence in the shipbuilding industry, where it has already secured significant orders and is investing heavily in green shipbuilding and high-end marine equipment.

Key Takeaways

• Hengli Shipbuilding plans to invest over 11 billion yuan to expand shipbuilding capacity, and the second phase project has commenced.
• Hengli Shipbuilding will focus on manufacturing high-value-added green ships and high-end marine equipment.
• After the project reaches full production, it is estimated to process 1.8 million tons of steel annually and have an annual output of 7.1 million deadweight tons.
• Hengli Shipbuilding holds 66 new ship orders, totaling 8.31 million deadweight tons, with the shipyard schedule extending to 2027.
• In cooperation with Samsung Heavy Industries of South Korea, Hengli Shipbuilding manufactures giant container ship modules.

Analysis

Hengli Group's expansion of its shipbuilding business, especially the investment in green ships and high-end marine equipment, will enhance its market competitiveness and attract attention from the capital market. This move may impact traditional shipbuilding enterprises like China Shipbuilding Industry Corporation, forcing them to accelerate transformation and upgrade. In the short term, Hengli Group's financial pressure may increase, but in the long run, its market share and profitability are expected to significantly improve. In addition, the collaboration with Samsung Heavy Industries not only strengthens technological capabilities but also signifies the importance of international cooperation in the high-end shipbuilding sector. This strategic move by Hengli Group is projected to drive technological innovation and market structure adjustments across the entire shipbuilding industry.

Did You Know?

• Hengli Group
  • Explanation: Hengli Group is a reputable enterprise in China and internationally, involved in various industries including chemicals, textiles, and energy. In recent years, the group has been actively expanding its shipbuilding business, indicating further deepening of its diversification strategy.
• Dry Bulk Carriers
  • Explanation: Dry bulk carriers are specialized ships for transporting unpackaged bulk commodities such as coal, ore, and grains. The construction difficulty of this ship type is relatively low, making it a common vessel type in the shipbuilding industry.
• Green Ships
  • Explanation: Green ships are vessels manufactured using environmentally friendly technologies and materials, aimed at reducing environmental pollution and carbon emissions during shipping. These ships are typically equipped with advanced energy-saving devices and clean energy systems, representing a significant direction for the global shipping industry's transition to sustainable development.