New Saudi shipyard to be built in South Korea

The development of a new shipyard at the King Salman Complex was announced in January 2016 with the signing of an MoU between Aramco, HHI, Bahri and Lamprell. (Photo/Supplied)
Updated 04 July 2019
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New Saudi shipyard to be built in South Korea

  • Order follows latest MoU signed between the two countries for crude oil carriers

SEOUL, South Korea: Saudi Arabian tanker giant Bahri is set to order very large crude oil carriers (VLCCs) from a large-scale shipyard being developed in the King Salman Complex by International Maritime Industries (IMI) at Ras Al-Khair, with the vessels being built at the dockyard of Hyundai Heavy Industries (HHI) in South Korea.

The order is a follow-up to the latest memorandum of understanding (MoU) for VLCCs, which was signed by Bahri, formerly known as the National Shipping Co. of Saudi Arabia, IMI and HHI during Crown Prince Mohammed bin Salman’s landmark visit to South Korea on June 26-27.

IMI is a joint venture between Saudi Aramco, Bahri, HHI, and Lamprell, an oil rig construction firm based in the UAE. HHI has agreed to increase its equity share in IMI from 10 to 20 percent, with an MoU between HHI and IMI to explore business opportunities in shipbuilding.

“Once Bahri places its order for the VLCCs, HHI will serve as a subcontractor by building the vessel at its yard in Ulsan, South Korea,” HHI told Arab News on Sunday.

“Among the partners of the IMI joint venture, HHI is the only partner capable of building a shipyard and providing the knowledge of building ships in line with international standards.”

FASTFACTS

 

• Bahri is expected to issue IMI its first order before the end of next month.

 

• The shipyard is to be completed by 2021 with an investment of about $4.3 billion.

The official said Bahri is expected to issue IMI its first order before the end of next month.

“HHI will help facilitate the transfer of knowledge and technology to enable IMI to eventually build VLCCs in Saudi Arabia,” he added.

Abdullah Al-Dubaikhi, CEO of Bahri, said: “Committed to playing a pivotal role in the transformation of the Kingdom into an important regional and global logistics and transportation hub, Bahri has been exploring new horizons for industry cooperation to take its vision forward.”

The latest agreement would strengthen its strategic relationship with IMI and HHI further, he added.

Fathi K. Al-Saleem, CEO of IMI, said: “This agreement further strengthens the business relationship between IMI and its shareholders, as well as contributing to the development of a localized maritime industry.”

IMI, one of the largest facilities in the Middle East and North Africa, can manufacture four offshore rigs, more than 40 vessels, including three VLCCs, and service over 260 maritime products per year.

During the crown prince’s visit to South Korea, Saudi Aramco and its affiliates signed multiple agreements with major South Korean conglomerates, including HHI, on new business opportunities to expand international operations.

The agreements, estimated to be worth some $8.3 billion, cover a wide range of industrial sectors including shipbuilding, refining, petrochemicals, as well as crude supply, sales and storage.

 The development of a new shipyard at the King Salman Complex was announced in January 2016 with the signing of an MoU between Aramco, HHI, Bahri and Lamprell.

The shipyard is to be completed by 2021 with an investment of about $4.3 billion.


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.