Money

Yacht maker Sunbird to raise $23.48m from public float

By Bao Chang and Zhou Yan (China Daily)
Updated: 2010-08-07 09:16

Private yatchs anchored at the Pudong harbor in Shanghai. [Yong Kai / For China Daily]

BEIJING - Yacht maker Sunbird Yacht Co Ltd has got initial approval from the China Securities Regulatory Commission (CSRC) to raise 159 million yuan ($23.48 million) through an initial public offering (IPO) of 22 million shares on the ChiNext board for start-ups in Shenzhen.

The Yuanjiang city, Hunan province-based company is the first yacht maker in China to raise funds through a public float. It has an annual output of more than 16,000 yachts.

"We are ready with the IPO, but still need to complete the final procedures for the float," said Zhang Chi, secretary of the board of Sunbird, without giving a timeframe for the IPO.

Sunbird said it intends to use the IPO proceeds to enhance its high-tech composite yacht making capacity to cope up with robust overseas demand.

The company's current production capacity is not enough to meet the surge in orders, said company officials.

Sunbird president Li Yuexian had earlier said, the company needs to raise funds, to improve the supply chain facilities to retain its market share in the industry.

According to data from the China Association of the National Shipbuilding Industry, Sunbird has a market share of 6.14 percent, while Zhuhai-based Cheoy Lee Shipyard is the leader with a 10.37 percent market share.

Sunbird realized a net profit of 28.03 million yuan in 2009, up 38 percent from a year earlier.

According to Maritime Safety Administration of the People's Republic of China, there are 102 private yachts in China. On average, nearly one out of every 13 million persons in China own a private yacht, compared with one out of 15 in the United States, the world's largest yacht consumer.

"The number is too small when compared with the number of rich people in the nation," said Zhao Xinhong, marketing manager of Shenzhen-based SCAS Yachts International Co Ltd.

A survey conducted in 2008 by Hurun Report, a Chinese luxury-publishing group, indicates that 11.7 percent of the billionaires in China would like to buy a yacht.

China has 477,000 individuals with investable assets of $1 million or more, according to a recent report from Capgemini and Merrill Lynch Wealth Management.

But China's yacht market still is in its infancy.

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Out of China's 370 yacht makers, 90 percent are still small companies. In contrast, foreign brands like UK boatyard Sunseeker and Italian company Azimut-Benutti have been aggressively expanding in China's high-end yacht market.

To prepare for the robust demand in Chinese market, Azimut is testing Chinese designs in its yachts to woo Chinese clientele. Mahogany furniture and Karaoke rooms have been added in their yachts.

"The yacht industry in China is poised for growth in the next five years and likely to catch up with US," said Federico Martini, chief executive officer of Azimut-Benutti.

Chinese yachts are priced much lower than their overseas counterparts, and that is their biggest advantage, said Li. The company expects the number of private yacht owners in China to surpass 1,000 this year.

"Sunbird's fundraising attempt through an IPO, will see more institutions investing in the fledgling industry. We expect more Chinese yacht makers to join the fund-raising bandwagon," said Zhao.