SSCS plans expansion into shipbuilding

The newly formed Shanghai Shipyard & Chengxi Shipyard (SSCS) aims to maintain its top ranking in China’s ship-repairing market while, at the same time, planning to enter into the domestic shipbuilding industry.

Company officials unveiled these objectives following SSCS’s launch on June 30, the result of a multi-billion-Yuan restructuring that involved two key subsidiaries of the China State Shipbuilding Corp (CSSC). SSCS was formed through the merger between Shanghai Shipyard and Chengxi Shipyard, located in Jiangyin in Jiangsu province.

The cross-region restructuring, reportedly the first of its kind nationwide, combined a total of $846 million worth of assets between the two companies. The new company also boasts a total land area of 3 million square metres and a water frontage of five kilometres to accommodate massive shipbuilding and repairing facilities. The ship-repairing business is expected to be key to the success of the new company, largely because of the two companies’ strengths in the area.

In 2003, Shanghai Shipyard reported a revenue volume of $29 million in its ship repairing operation, which ranked it number 8 ranking in the industry nationwide while Chengxi did even better as it chalked up revenue of $68.9 million giving it a ranking of number 4. While Shanghai Shipyard anticipates its revenue in the ship repairing business to top $48 million this year, the Chengxi side expects the figure to reach $96 million. The majority of the two shipyards’ business comes from overseas clients.

It is a natural choice for SSCS to focus on the ship repairing business given that its current gross profit margin is as high as 20% compared to the shipbuilding business where margins are around 6% due to the recent price hike in steel.