rongsheng chen manufacturer

HONG KONG, Nov 26 (Reuters) - China Rongsheng Heavy Industries Group, the country’s largest private shipbuilder, said its chairman had stepped down just three months after the company posted its sharpest fall in half-year net profit.

Zhang Zhirong quit to devote more time to his personal interests and will be replaced by the company’s chief executive officer, Chen Qiang, effective immediately, the company said on Monday in a statement to the Hong Kong stock exchange.

Listed in November 2010, Rongsheng was hit by an insider dealing scandal involving a firm owned by Zhang ahead of the $15.1 billion bid for Canadian oil firm Nexen Inc by China offshore oil and gas producer CNOOC.

Rongsheng said earlier this month that investment firm Well Advantage, controlled by Zhang, had agreed to pay $14 million as part of a settlement deal with the U.S. Securities and Exchange Commission (SEC).

In August, Rongsheng posted an 82 percent drop in half-year profit on a dearth of new orders and warned economic uncertainties would continue to weigh on the global shipping market.

As part of the changes at China Rongsheng, the company said that Zhang De Huang was retiring and had resigned as an executive director and as vice chairman of the board.

The No 4 dock at Jiangsu Rongsheng Heavy Industries Co Ltd"s Nantong shipbuilding base on May 26, 2012. With a dimension of 139.5*580m，the dock is equipped with a 1600-T gantry crane, the world"s largest. [Photo/chinadaily.com.cn]

China Rongsheng Heavy Industries Group Holdings Ltd, the nation"s largest private shipbuilder, may seek "cooperation with one or two ship builders" in 2013 or 2014, grasping the opportunity emerging from an industry recession, according to Xu Yifei, assistant president of Jiangsu Rongsheng.

In response to this round of recession, Rongsheng has been actively upgrading technology and design. It has also put more focus on the offshore engineering sector to further diversify its business.

Rongsheng is setting up its offshore engineering company in Singapore, aiming to take advantage of Singapore"s technology and existing market to deepen its penetration in the global offshore engineering market, according to Xu.

The company entered the marine engineering sector years ago. China"s first deepwater pipe-laying crane vessel, known as Hai Yang Shi You 201, was built by Rongsheng. The vessel can lay pipes at depths of 3000 meters and lift 4000 metric tons and will operate at the South China Sea"s Liwan 3-1 gas field.

Rongsheng"s president, Chen Qiang, said in an earlier interview that he hoped orders from marine engineering will make up about 40 percent of the company"s new orders this year.

China Rongsheng Heavy Industries Group, China"s largest private shipbuilder, issued a surprise warning that it expects to post an annual net loss for 2012 on sharp declines in orders and prices of new vessels after the shipping industry took a downward turn during the year.

Rongsheng was hit by an insider dealing scandal last year involving a company owned by its major shareholder, Zhang Zhirong, who stepped down as chairman last month and was replaced by chief executive officer, Chen Qiang.

Shares of Rongsheng ended down 1.5 percent on Monday and have lost 37 percent of their value this year, underperforming a 22 percent gain on the Hang Seng Index.

In August, Rongsheng reported its sharpest fall in half-year profit, down 82 percent, to 215.8 million yuan ($34.65 million)on a dearth of new orders, putting further pressure on its stretched balance sheet.

In an uncertain profit outlook, the shipbuilder"s estimated free cash flow in 2013-14 was unlikely to be enough to lower net debt, Citi said in a research report on Dec. 10. Rongsheng had net debt of about 17 billion yuan, it added.