State-backed China Shipbuilding to raise $1.4 billion for naval buildup

[cirr]

By Yimou Lee and Michael Martina

HONG KONG/BEIJING | Wed Sep 11, 2013 1:24am EDT

(Reuters) - State-backed China Shipbuilding Industry (601989.SS) plans to raise up to $1.4 billion through a private share sale to buy assets used for building warships, the first time Beijing is tapping the capital market to fund its military expansion.

The move comes as China creates its own military-industrial complex, with the private sector seen taking a key role, as the country gains a new sense of military assertiveness and deals with a growing budget to develop modern equipment including aircraft carriers and drones.

China, whose military spending is now second only to the United States, has unveiled a double-digit rise in its 2013 military budget, with spending on the People's Liberation Army set to rise 10.7 percent to 740.6 billion yuan ($119 billion).

"The thinking of those high-ranking officials is changing. Military asset securitization, or tapping capital markets for military expansion, will be the future trend and the funding scale will also become bigger and bigger," said Wang Hexu, a Shanghai-based analyst at Hwabao Securities.

"Now aviation and weaponry may also be the next sectors for asset securitization," he said.

China Shipbuilding Industry Co Ltd (CSIC) said it plans to raise as much as 8.48 billion yuan ($1.4 billion) by selling up to 2.2 billion shares to as many as 10 selected investors. The investors include two sibling companies, Wuchang Shipbuilding and Dalian Shipbuilding, which are key builders of Chinese warships.

The company, a key supplier to the People's Liberation Army, said it was the first time China was going to the capital market to fund the buildup of its core military.

"The deal will expand the financing channels for China's military defense," China Shipbuilding said in a statement posted on the Shanghai Stock Exchange's website. "It would also herald an overall securitization of China's military assets."

NEW CARRIERS

Beijing last year issued new guidelines aimed at encouraging private investment in a defense sector traditionally sheltered from competition and public scrutiny.

Such investment would bode well for Chinese military-focused shipbuilders compared with commercial shipbuilders like Rongsheng Heavy Industries Group (1101.HK), which fell to a first-half loss and has requested financial help from the government.

China is expected to build one or more aircraft carriers over the next five to 10 years, with each carrier fleet costing nearly $20 billion, China Shipbuilding said, citing expert forecasts.

"CSIC has been rumored to be one of those that's going to either build, or fit out the new domestically manufactured aircraft carrier," said Gary Li, a Beijing-based senior maritime analyst at consulting firm IHS.

"Some of the companies that are going to be the main buyers of the shares are all keen to have a stake in the new carrier project. Everything from batteries to catapults. It's a big task and the Chinese shipbuilding industry is going to need as many stakeholders and investors as it can get."

Shanghai-listed shares of China Shipbuilding, which had been suspended since May pending the announcement of the deal, jumped more than 10 percent on Wednesday morning. The company has a market value of $10.8 billion.

Military-related products account for 8.3 percent of China Shipbuilding's income, according to Hwabao Securities.

China currently has one aircraft carrier, the Liaoning, which was refitted from a Russian-made model. Considered by military experts to be decades behind U.S. technology, it was originally intended to serve as a floating casino but was turned to military use in the run-up to a power transition in 2012.

China has been at odds with some of its Southeast Asian neighbors over conflicting claims to strings of islets in the resource-rich South China Sea and Beijing now has the firepower to challenge these rivals.

($1 = 6.1200 Chinese yuan)

State-backed China Shipbuilding to raise $1.4 billion for naval buildup | Reuters

 

[cirr]

China moves closer to electric propulsion for naval ships

Published By United Press International

BEIJING, Aug. 29 (UPI) -- China Shipbuilding Industry Corp. said it has finalized its gas turbine electric propulsion system for naval ships, China Daily reported.

CSIC's Wuhan Institute of Marine Electric Propulsion has been developing the system with a view to making China less dependent on foreign-made gas turbines that produce electricity to power vessels.

China Daily quoted Wang Dan, deputy editor in chief of Modern Ships magazine, as saying the technology is imperative for China to keep up with British and American naval propulsion systems.

"With the achievement made by our technicians, we are seeing an opportunity to narrow the gap with Western naval powers," Wang said.

"The British navy's Queen Elizabeth aircraft carrier and the United States Navy's Zumwalt-class destroyers, which are under construction, will use the new electric propulsion technology. We must accelerate our development [of the technology] if we don't want to fall behind in building advanced ships."

An integrated electric propulsion system uses a gas turbine or diesel generator to produce electricity that powers motors, which turn propeller shafts or operate waterjets.

The system significantly does away with heavy mechanical clutches and highly sophisticated gearboxes that reduce or increase power to propeller shafts.

Wang said an integrated electric propulsion system saves space and weight and is easier to control and maintain. It also is quieter to run and can increase a ship's speed over conventional diesel engines.

The China Daily report gave no details of the CSIC's turbine system.

Rolls-Royce announced in January that it had installed into the Queen Elizabeth aircraft carrier the first of two marine gas turbine engines.

The MT30, a 36-megawatt -- about 50,000 horsepower -- engine, was lowered into the hull under construction at Babcock's Rosyth shipyard in Scotland.

Rolls-Royce said two MT30s will be installed in the Queen Elizabeth and also in the sister Queen-Elizabeth-class carrier Prince of Wales. The two engines will provide two-thirds of the 109 megawatts needed to power the nearly 72,000-ton vessel, Rolls-Royce said.

The MT30s are installed as part of a gas turbine alternator system that, along with enclosures, weighs about 120 tons.

The Queen Elizabeth is scheduled for sea trials in 2017 and flight trials in 2018.

The vessels will be the largest ever for the British navy and will carry up to 40 aircraft, including Lockheed Martin's F-35 Lightning II fighters.

Rolls-Royce's MT30 powers the U.S. Navy's Freedom Class variant of the Littoral Combat Ship, will power South Korea's FFXII frigate and are destined for the U.S. Navy's Zumwalt-class destroyers.

Huntington Ingalls Industries, formerly called Northrop Grumman Shipbuilding, in Virginia, and Bath Iron Works in Maine are building the Zumwalt destroyers.

Rolls-Royce said the MT30 gas turbine is derived from Rolls-Royce's Trent 800 aircraft engine that powers Boeing 777, with about 80 percent of the parts being the same.

China moves closer to electric propulsion for naval ships - UPI.com

 

[Götterdämmerung]

This is not good. Creating a military-industrial-complex is dangerous not only for China, but for the whole world. Just have a look at the USA.

I see desaster coming in a few decades.

 

[eddieInUK]

This is not good. Creating a military-industrial-complex is dangerous not only for China, but for the whole world. Just have a look at the USA.

I see desaster coming in a few decades.

The company is still under government control, the CEO is appointed by the central government, disaster will happen when it becomes private and influence the congress.

 

[cirr]

This is not good. Creating a military-industrial-complex is dangerous not only for China, but for the whole world. Just have a look at the USA.

I see desaster coming in a few decades.

（1）CSIC is the smaller of the 2 major state-owned shipbuilders（conglomerate is more appropriate a word）in China，the other being CSSC。

（2）China Shipbuilding Industry（CSI，Stock Code：601989.SS）is a small part of CSIC which will retain a 62% stake in CSI after the share placements。

（3）Under 9% of CSI's current business is naval related。

In short，China is devoting a tiny amount of its resources to the naval build-up。Since the defence of a nation is the responsibility of every citizen in that nation，it is only appropriate and right that everyone has a chance to participate in the armed forces' modernization drive。

By the way，shares of CSI have seen three limit-ups in as many todays。The company is likely to be vauled at some 20 billion dollars after the new issue。 Lots of happy stakeholders。

 

[ChineseTiger1986]

Good news, but some stupid regionist CDers are fighting which is better between Dalian and Jiangnan.

 

[cirr]

Over 50% of China's shipbuilding industry is in private hands。

 

[cirr]

Good news, but some stupid regionist CDers are fighting which is better between Dalian and Jiangnan.

Both will have their cakes（CVs）and eat them。

Jiangnan is one of 5 flagship shipbuilders under CSSC，while Dalian is the standard bearer of CSIC。

It is a great pity that the recent fund raising does not involve Huludao，an asset that's unique to CSIC。

 

[ChineseTiger1986]

Both will have their cakes（CVs）and eat them。

Jiangnan is one of 5 flagship shipbuilders under CSSC，while Dalian is the standard bearer of CSIC。

According to the big shrimp such as POP3, both deserve their share of CV, but some regionists are pretty imbecile and flamebaiters.

Dunno why they always love to belittle JN shipyard.

¿´Ñù×Ó£¬ÒªÂ仧Ì쳯´óÁ¬Ôì´¬³§ÁË-º£¾ü°æ-³¬¼¶´ó±¾Óª¾üÊÂÂÛ̳-×î¾ßÓ°ÏìÁ¦¾üÊÂÂÛ̳ -

CD's quality has been dragged down by those idiots.

Over 50% of China's shipbuilding industry is in private hands。

Most of the shipyards are building the civilian ships, but the military shipbuilders are always state-owned, since quality and value of the civilian shipbuilders are nowhere close to that of the military shipbuilders.

 

[Echo_419]

1.4 Billion is a little to low don't you think
According to Chinese Standards