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A very large liquefied petroleum gas carrier is unveiled in Shanghai. Photo:VCG

Shares in CSSC Science & Technology Co jumped by almost the daily limit of 10 percent at the opening on Wednesday as investors reacted positively to a possible merger between the company's parent and another giant State-owned shipbuilder.

The share price of CSSC Science & Technology Co, a subsidiary of China State Shipbuilding Corp (CSSC), rose 9.82 percent at the market opening on Wednesday and closed 1.79 percent higher at 18.77 yuan ($2.83).

The price move followed announcements by two other listed arms of CSSC - CSSC Offshore & Marine Engineering (Group) Co and China CSSC Holdings - on Tuesday night about a trading suspension starting on Wednesday, pending major events that might involve asset restructuring.

Since China merged its two bullet train makers in 2015, both of which were centrally administered State-owned enterprises under the State-owned Assets Supervision and Administration Commission (SASAC), a merger between the two State-owned shipyards  - CSSC and China Shipbuilding Industry Corp (CSIC) - has been anticipated by investors.

In March 2015, CSSC and CSIC even swapped their management.

Zheng Ping, chief analyst of industry news site, said the shipbuilding industry is one of the worst-hit areas in terms of excess  capacity and consolidation can be expected, but the ultimate form of that consolidation remains to be seen.

"Given the current situation, it could be that the two listed companies under China State Shipbuilding Corp are undergoing a restructuring process," Zheng told the Global Times on Wednesday.

"It could also turn out to be, as some have expected, a restructuring between two group companies that would resemble a merger like that between China CNR Corp and CSR Corp into CRRC Corp in 2015," noted Zheng.

"Excess shipbuilding capacity is a global issue, and during recent years, we have seen many shipyards that rely solely on civilian vessels either file for bankruptcy or undergo consolidation," Zheng said.

"It is interesting that rumors of a CRRC-style shipyard merger have circulated for almost two years, but it has yet to take place even though several other pairs of central SOEs have completed mergers," said Zheng.

In the past two years, China has pursued mergers of central SOEs, in part to boost their global competitiveness.

The mergers include those between competitors and those involving vertical integration with upstream and downstream companies. As a result, the number of central SOEs has been trimmed from nearly 110 to 98.

Wu Minghua, a Shanghai-based independent shipping industry analyst, told the Global Times on Wednesday that consolidation in the sector was to be expected as global shipping companies have undergone rounds of mergers since the global financial crisis in 2008-09 hit trade and shipping activity.

"Bigger shipbuilding companies have better ability to win orders and deliver vessels. They will have better competitiveness on the global stage as consolidation can allow them to focus on core technologies and key vessels such as icebreakers, cruise ships and maritime engineering equipment," Wu said, noting that the major rivals on the global stage are South Korean, Japanese and European shipyards.

The downside is that the Chinese companies might lose some "fighting spirit" in the domestic market if they really do consolidate, noted Wu.

CSIC has two subsidiaries: China Shipbuilding Industry Co and China Shipbuilding Industry Group Power Co. The former suspended trading of its shares in May, pending announcement of a major restructuring.

Shanghai-listed China Shipbuilding Industry Group Power Co saw its share price rise 1.25 percent to 25.16 yuan on Wednesday after hitting an intraday gain of 3.53 percent.