Among the main shipbuilding countries in 2006, the production capability of the three major South Korean shipbuilding factories was 7.051 million CGT, and the order in hand was 30.311 million CGT, 4.3 times of the production capability. The production capability of the top five Japan-based shipbuilding factories was 4.008 million CGT and, the order in hand was 11.168 million CGT, 2.79 times of the production capability. The production capability of the top seven Chinese key shipbuilding factories (excluding Changxing Island) was 2.166 million CGT and, the order in hand was 10.358 million CGT, 4.78 times of the production capability. By Jan. 2007, the average shipbuilding order in hand was 2.85 times of the production capability in the world.

In 2006, the shipbuilding completed volume reached 14.52 million DWT in China, up 20% year-on-year; the newly-received shipbuilding order totaled 42.51 million DWT, rising 150% from a year earlier; and the shipbuilding order in hand amounted to 68.72 million DWT, increasing 73% over 2005.

Guangzhou Shipyard International Co., Ltd (GSI) had one 40,000-ton and two 60,000-ton shipbuilding berths, and a 10,000-ton shipyard as well. It started to reform the 40,000-ton shipbuilding berth in 2006, and reconstructed the 10,000-ton shipyard to be a 50,000-ton one, meanwhile, added two 300-ton cranes to replace the original 100-ton ones, and built the sections factories in Sihui and Zhaoqing. It is forecasted that it can provide 20,000-30,000 ton section processing amount in 2007, and after achieving the production, it can provide 50,000-ton section processing amount in 2008. In addition, the shipbuilding capability can increase to 600 thousand DWT from 450 thousand DWT in 2006, up about 30%.

GSI Quarterly Profit Margin and Net Profit Margin of Main Business, 2004Q1-2007Q1

2 Overview of Shipbuilding Industry
2.1 Shipbuilding Industry Prosperity Periodicity Extends
2.2 Strong Demand of Product Tanker and Chemical Tanker
2.3 Transference of Shipbuilding Industry to China Will Ease Periodicity Influence

3 Competitive Advantages of GSI
3.1 Flexible Tanker
3.2 High Value-added Shipbuilding Fields
3.2 Overall Listing of CSSC

4 Profitability Forecast of GSI

5 Risks
5.1 Controlling of Large Shareholders
5.2 Fluctuation of Raw Material Price and Labor Force Cost
5.3 RMB Appreciation