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UPDATE 1-Shandong Molong shares slide after company posts full-year loss
April 1, 2014 / 3:52 AM / 4 years ago

UPDATE 1-Shandong Molong shares slide after company posts full-year loss

* Shares hit 52-week low, down as much as 8.9 percent

* Reports operating loss in casing and tubing unit

* Short term debt more than twice cash balance

* Bonds hammered by weakening credit metrics (Adds context, bonds, graphic)

HONG KONG, April 1 (Reuters) - Shares of China’s Shandong Molong Petroleum Machinery Co Ltd fell as much as 8.9 percent on Tuesday to their lowest in a year after red ink in its mainstay casing and tubing division resulted in a 2013 loss.

Shandong supplies petroleum machinery parts and pumping units to oil fields run by China’s biggest players in the industry, earning 90 percent of revenue from supplying casing and tubing.

Shandong did not elaborate on why the division saw red late on Monday when it reported a full-year net loss of 175.7 million yuan ($28.26 million), compared with a profit of 134.3 million yuan a year earlier. Revenue fell 23 percent to 2.27 billion yuan.

Shandong suspended trading of its shares in Hong Kong on Monday pending the report, which it postponed until the evening. On resuming trade early Tuesday, its shares fell as much as 8.9 percent, compared with a 0.7 percent gain in the broader market .

Shandong’s customers include China’s largest oil and gas producer Petrochina and state-run China Petroleum and Chemical Corp (Sinopec Corp) . Together, they account for more than a quarter of revenue.

DEBT

As well as reporting a loss, Shandong said its total debt rose marginally to 2.3 billion yuan, while Thomson Reuters data showed Shandong’s short-term debt reached more than two times its cash on hand. Yields on Shandong bonds have surged.

Shangdong’s 5.2 percent coupon bonds due 2016 currently yield about 15 percent, from 6.7 percent at the end of February, showed Thomson Reuters data.

The company is due to make a coupon payment on its 500 million yuan 2016 bond later this year, which it has previously said it can meet.

“Our company is capable of paying the interest now, since it is not due until July,” board secretary Zhao Hongfeng told Reuters earlier this month.

$1 = 6.2180 Chinese Yuan Reporting by Umesh Desai and Anne Marie Roantree; Editing by Paul Tait

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