COSCO Pacific in US$2b ports drive
Chinese container leasing firm and port investor COSCO Pacific expects significant and robust' earnings growth over the next five years as it invests up to US$2 billion to double the number of its berths, a top executive said.The Beijing-backed company will invest US$350 million to US$400 million a year over five years, adding to its110 berths in China and abroad, deputy managing director Kelvin Wong said."Our earnings growth will be significant and robust.
In five years, the port division will become our dominant earnings source," he added, but declined to provide a specific forecast.Ports will make up more than half of the company's earnings five years from now, Wong said. Ports and container leasing each account for about one-third of the company's profits, with the rest coming from container manufacturing and logistics services.Anchoring the growth of COSCO Pacific's port division are China's surging trade volume and the firm's business relationships with shipping giants in South Korea and Japan. "Their ships are loaded with goods, forming strong demand for our ports and enhancing our earnings visibility," Wong said.The firm's earnings fell 36 percent to US$136.4 million in the first six months from the year-ago period, due in part to provisions for a put option it issued for A-shares in its manufacturing unit China International Marine Containers.Shares in COSCO Pacific slid after its announcement of the disappointing first-half earnings in September but have recovered a bit in recent weeks.COSCO Pacific, a unit of China COSCO Holdings - the country's largest container shipping firm - is focusing on its high-value port business after it sold nearly 60 percent of its marine containers in June.
COSCO Pacific's ports, including one in Singapore and one in Belgium, handled 27 million TEUs (20-foot equivalent units) in the first 10 months of this year, up 26 percent, making it the world's fifth-largest port operator with about 5 percent of the global market, Wong said.The company is looking for more port acquisitions abroad, but the domestic market will be the focus because it is the fastest growing major market.Any overseas acquisitions would be made with the assistance of foreign partners such as Moeller-Maersk, which can help COSCO Pacific overcome business hurdles, Wong said."If we do it by ourselves, we may not be able to secure a single deal within a year. But it will be totally different if they help us," he said.