Deutsche Bank issued a report that Rongsheng shipbuilding business prospects are weak, other divisions disappointed with the progress of development, reduced its profit forecast by 59-71%, the target price sharply reduced from 3.2 yuan to 1.6 yuan, rating from "hold" to "sell".

The bank said that Rongsheng's net profit last year was only 1.7 billion yuan (the same below), which was lower than the bank's forecast of 2.8 billion yuan and the market forecast of 2.4 billion yuan, and its gross profit margin also fell to 20% from 22.4%.

Deutsche Bank pointed out that Rongsheng's weak new shipbuilding orders are mainly due to oversupply in the market, tight credit, more fierce competition in the mainland and continued pressure on gross profit margins.

In addition, the company's accounts receivable increased significantly from 328 million yuan in 2010 to 3.6 billion yuan last year, of which 2.484 billion yuan was due in 1-180 days. Rongsheng believes that there is no need to make provisions for bad debts, but Deutsche Bank believes that the situation must be carefully monitored.