Speculators Elevate Rongsheng Stock 22 Percent on Offshore Market Optimism

(Bloomberg) — China Rongsheng Heavy Industries Group Holdings Ltd. jumped by a record in Hong Kong trading as a new manager and an order to build a tender barge stoked optimism about the company’s push into the offshore-equipment market.

The shipbuilder, China’s biggest outside state control, surged as much as 22 percent, the most since it listed in November 2010. The company was up 14 percent at HK$1.58 as of 1:57 p.m. There were 19 trades of 1 million shares or more, according to data compiled by Bloomberg.

The tender-barge order marks a breakthrough for Shanghai- based Rongsheng as it’s the company’s first in the offshore engineering sector, according to Barclays Plc. The shipbuilder has also hired Don Lee, a former Sembcorp Marine Ltd. executive, and formed a dedicated offshore unit in Singapore as it seeks orders from energy companies to offset waning demand for dry bulk ships.

“Don Lee is very well-known in the marketing and operations of offshore products,” said Shanghai-based UOB Kay Hian Holdings Ltd. analyst Lawrence Li. “The market is expecting that he’ll bring in more offshore orders.”

Lee has worked in the industry for 40 years, and was previously senior general manager at Sembcorp Marine’s Jurong Shipyard, Rongsheng said in a statement yesterday. Singapore-based Sembcorp is the world’s second-biggest oil-rig maker after Keppel Corp.

Rongsheng won the tender-barge order from a Norwegian customer, it said without elaboration. The unit will have a maximum working depth of 2,000 meters and a drilling depth of 6,000 meters, according to the statement.

The company’s first-half net income fell 82 percent to 215.8 million yuan ($35 million) as a global glut of commodity ships depressed orders and prices.

A company controlled by Rongsheng Chairman Zhang Zhi Rong, Wells Advantage Ltd., also last week agreed to pay $14 million to resolve U.S. regulatory claims that it profited from illegal trades before Cnooc Ltd. announced plans to buy Nexen Inc.