Shanghai Zhenhua Heavy Industry Co., Ltd (Zhenhua), the largest manufacturer of heavy-duty equipment in the world, has signed a $2.2-billion contract with Span's ADHK for ocean engineering products, Caijing reported on Monday. Along with the reported $2-billion deal with Iran, Zhenhua would get totally $4.2 billion deal from the ocean engineering industry.
ADHK (Arborec Desarollos Sociedad Anonima Hong Kong) will order ten sea jackup drilling platforms, seven inland rigs and two floating cranes from Zhenhua, according to the contract. All of the products should be ready for delivery before July 31, 2012,and Zhenhua is allowed to advance the shipment.
Zhenhua said that the contract is the biggest among domestic equipment manufacturing industry with the record-breaking order for ten drilling platforms in one contract. The contract will have the good influence to the group's performance in the coming two years, according to Zhenhua.
Zhenhua announced on July 15 that it was talking a bid deal with customers and thus its stock was suspended trading.
A person close to the matter disclosed that Zhenhua is likely to win an order worth $2 billion from Iran. The involved products are also offshore heavy-duty machinery.
As the deal is too big, so the stock trading suspension will last from July 15 to 21, until the contract is clinched. Market analysts guess that the deal would bring profits of $200 million to Zhenhua.
The ocean engineering has become a hot issue in the global equipment manufacture industry at present, drawing nearly $30 billion capital each year.
In recent years, Zhenhua has exploited the market for offshore oil which has become a new source of profit. Along with the global economic revival, the demand for oil and other energies will trigger the boom of marine heavy industry, Zhenhua predicted.
After changing name from Shanghai Zhenhua Port Machinery to Shanghai Zhenhua Heavy Industry, the Chinese company gradually shows the ambition and resolution in shifting major business to offshore heavy machinery.
Zhenhua raised its 2009 annual production to 35 billion yuan ($5 billion) in the general meeting of shareholders in 2008 , with ocean engineering production making up one third of it to $1.5 billion. The ratio is expected to grow up to a half in the future.
Zhenhua gained 27.443 billion yuan ($4.02 billion) revenue from major business in 2008 and reaped net profits of 2.551 billion yuan ($373.4 million).
Zhenhua has sold major products to 73 countries and areas. Its products have captured more than 78% of the world market share in the industry.
ADHK, which was registered in Spain, is mainly engaged in oil drilling business.