China Cosco Holdings Co. , Asia’s largest container-shipping company, rose to the highest in more than a week in Hong Kong trading after saying rates have improved this year and may “recover to normal levels.”
The shipping line gained as much as 5.7 percent to HK$4.79, the highest intraday price since March 20. It was up 4.9 percent at HK$4.75 as of 1:53 p.m. China Shipping Container Lines Co. climbed as much as 6.4 percent, Bloomberg reports. China Cosco, AP Moeller-Maersk A/S and other container lines have pared capacity and pushed through rate increases this year after price wars hammered earnings in 2011. China Cosco’s container-shipping unit lost 6.4 billion yuan last year, helping cause the Tianjin-based company’s biggest net loss in decade.
“Industry fundamentals are rapidly improving,” said Credit Suisse AG analysts Davin Wu and Timothy Ross in a note to clients today. “We are confident that the unit can return to break even in the second quarter.” They reiterated an outperform rating on the stock.
The container-shipping unit’s average rates fell 20 percent last year, based on a Hong Kong stock exchange statement late yesterday. Sales dropped 11 percent to 41.4 billion yuan, even as volumes rose 11 percent to 6.9 million boxes. Average rates on Asia-Europe routes tumbled 33 percent, while trans-Pacific fees dropped 16 percent, based on Bloomberg calculations.
Asia-Europe Routes
“Since the beginning of 2012, the freight rates of Asia- Europe routes and Pacific routes have been improved,” Cosco said in its statement. Rates across the industry “are expected to recover to normal levels,” it said.
The company posted a net loss of 10.5 billion yuan last year, compared with net income of 6.9 billion yuan in 2010. It was expected to have a 6.7 billion yuan net loss, based on the average of nine estimates compiled by Bloomberg. Sales fell 12 percent to 84.6 billion yuan.
China Cosco’s dry-bulk vessels had a 5.4 billion yuan loss as expansion in the global fleet outpaced China’s demand for coal and iron-ore shipments. The price of 380 Centistoke Bunker Fuel, used by ships, also averaged 40 percent higher last year than a year earlier in Singapore trading, according to data compiled by Bloomberg.
The commodities-shipping business had a 7 percent decline in traffic to 1.32 trillion ton-nautical miles last year. That may drop to 884.6 billion this year, the company said. It had a fleet of 374 dry bulk ships as of Dec. 31, compared with 450 a year earlier.
Dry-Bulk Slowdown
The company expects a slowdown in the bulk-shipping market in the first half followed by a pickup in the second half. The global dry-bulk demand may expand 4 percent this year, it said, citing shipbroker Clarkson Plc (CKN), compared with an anticipated 11 percent increase in capacity.
“The large delivery pressure will depress the recovery of the market,” the company said. “Excessive shipping capacity will still linger.”
The Baltic Dry Index (BDIY), a benchmark for commodity-shipping rates, has dropped 41 percent in the past year.
The company had 157 container ships at the end of 2011. The combined capacity was 667,970 boxes, an 8.8 percent increase from a year earlier. The shipping line is due to receive 10 owned vessels able to carry 4,250 boxes each this year, along with four leased 13,000-container vessels.
China Cosco’s logistics business made a 626.5 million yuan profit last year and terminal operations had a 492.7 million yuan profit.
The shipping line gained as much as 5.7 percent to HK$4.79, the highest intraday price since March 20. It was up 4.9 percent at HK$4.75 as of 1:53 p.m. China Shipping Container Lines Co. climbed as much as 6.4 percent, Bloomberg reports. China Cosco, AP Moeller-Maersk A/S and other container lines have pared capacity and pushed through rate increases this year after price wars hammered earnings in 2011. China Cosco’s container-shipping unit lost 6.4 billion yuan last year, helping cause the Tianjin-based company’s biggest net loss in decade.
“Industry fundamentals are rapidly improving,” said Credit Suisse AG analysts Davin Wu and Timothy Ross in a note to clients today. “We are confident that the unit can return to break even in the second quarter.” They reiterated an outperform rating on the stock.
The container-shipping unit’s average rates fell 20 percent last year, based on a Hong Kong stock exchange statement late yesterday. Sales dropped 11 percent to 41.4 billion yuan, even as volumes rose 11 percent to 6.9 million boxes. Average rates on Asia-Europe routes tumbled 33 percent, while trans-Pacific fees dropped 16 percent, based on Bloomberg calculations.
Asia-Europe Routes
“Since the beginning of 2012, the freight rates of Asia- Europe routes and Pacific routes have been improved,” Cosco said in its statement. Rates across the industry “are expected to recover to normal levels,” it said.
The company posted a net loss of 10.5 billion yuan last year, compared with net income of 6.9 billion yuan in 2010. It was expected to have a 6.7 billion yuan net loss, based on the average of nine estimates compiled by Bloomberg. Sales fell 12 percent to 84.6 billion yuan.
China Cosco’s dry-bulk vessels had a 5.4 billion yuan loss as expansion in the global fleet outpaced China’s demand for coal and iron-ore shipments. The price of 380 Centistoke Bunker Fuel, used by ships, also averaged 40 percent higher last year than a year earlier in Singapore trading, according to data compiled by Bloomberg.
The commodities-shipping business had a 7 percent decline in traffic to 1.32 trillion ton-nautical miles last year. That may drop to 884.6 billion this year, the company said. It had a fleet of 374 dry bulk ships as of Dec. 31, compared with 450 a year earlier.
Dry-Bulk Slowdown
The company expects a slowdown in the bulk-shipping market in the first half followed by a pickup in the second half. The global dry-bulk demand may expand 4 percent this year, it said, citing shipbroker Clarkson Plc (CKN), compared with an anticipated 11 percent increase in capacity.
“The large delivery pressure will depress the recovery of the market,” the company said. “Excessive shipping capacity will still linger.”
The Baltic Dry Index (BDIY), a benchmark for commodity-shipping rates, has dropped 41 percent in the past year.
The company had 157 container ships at the end of 2011. The combined capacity was 667,970 boxes, an 8.8 percent increase from a year earlier. The shipping line is due to receive 10 owned vessels able to carry 4,250 boxes each this year, along with four leased 13,000-container vessels.
China Cosco’s logistics business made a 626.5 million yuan profit last year and terminal operations had a 492.7 million yuan profit.