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9 Jul 2013
Flash: Chinese credit woes surfacing? – Deutsche Bank
FXstreet.com (New York) - China has been the subject of several interesting credit stories of late, notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
China's biggest private shipbuilder China Rongsheng Heavy Industries Group last week filed for a profit warning as it expects a loss in the 1H of 2013. According to the analysts, “Rongsheng appealed for government aid last Friday and said it was cutting staff and delaying payments to suppliers to deal with tightened cash flows. It also called on its shareholders for financial help and said it was in talks with banks and other financial institutions to renew existing credit lines.”
The sector is clearly going through some challenging times right now but the company's liquidity appears stretched. According to Bloomberg, Rongsheng had CNY2.1bn in cash balance versus short-term borrowings of CNY19.3bn at the end of last year. Being a flagship operator in the industry that employs around 20,000 workers there are also increasing talks of whether the company is too-big-too-fail for the state. Rongsheng's share price is down c.35% YTD as we continue to keep tabs on China credit related stories.
China's biggest private shipbuilder China Rongsheng Heavy Industries Group last week filed for a profit warning as it expects a loss in the 1H of 2013. According to the analysts, “Rongsheng appealed for government aid last Friday and said it was cutting staff and delaying payments to suppliers to deal with tightened cash flows. It also called on its shareholders for financial help and said it was in talks with banks and other financial institutions to renew existing credit lines.”
The sector is clearly going through some challenging times right now but the company's liquidity appears stretched. According to Bloomberg, Rongsheng had CNY2.1bn in cash balance versus short-term borrowings of CNY19.3bn at the end of last year. Being a flagship operator in the industry that employs around 20,000 workers there are also increasing talks of whether the company is too-big-too-fail for the state. Rongsheng's share price is down c.35% YTD as we continue to keep tabs on China credit related stories.