Chief operating officer Sun Xiaoming has walked the plank at Dongfang Shipbuilding after two big contracts in its order book were cancelled.
As recently as November 17th the company said it had an order book of around $64.7m, and While a small proportion of this order book has either been completed or remains as work in progress, the two largest contracts totalling some $52.6m have been cancelled following the failure to finalise the technical contracts and secure the required banking finance and performance bonds.
Therefore, the live order book has been reduced to $5.7m for delivery in July 2012.
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"As market conditions have worsened, it has been increasingly difficult to secure the relevant banking finance for the execution of the contracts to allow commencement of work," the firm said.
"Whilst the board is extremely concerned about the fall in order book and the poor state of the shipbuilding market in general, it has made progress in its discussions with its banks and should be better placed to undertake any new orders as they come in."
The share price plunged 27.4% to 26.5p by 13:40.
Even house broker Northland Capital Partners admitted things are looking bleak for the shipbuilder.
"The performance of the shipbuilding division has deteriorated significantly since the HY [half year] and the continuing lack of orders is a major concern. The business is cyclical and therefore dependent on an improvement in the economic cycle. Until this happens it is unlikely to see any material improvement in demand. With many of the group's customers based in Europe it is very unclear when this will happen," Northland analyst Andy Hanson said.
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