China Shipping Container Lines Co, whose shares have more than tripled this year, plans to sell stock in China this year after first-half profit jumped more than 14-fold on improved shipping rates and higher cargo volume.
The share sale will fund the purchase of new ships and the repayment of loans, the Shanghai-based company said in a statement. First-half net income rose to 1.16 billion yuan (S$231 million), or an undiluted 0.19 yuan a share, from 81.2 million yuan, or 0.01 yuan, a year earlier, it added. The company, Asia's second-largest carrier of sea-cargo boxes, would follow larger rival China Cosco Holdings Co, which raised 15 billion yuan in a Shanghai share sale in June. China Shipping's profit rose as rates for Asia-Europe shipments climbed more than 20 per cent in the first half from a year earlier, according to spokesman Ye Yumang.
'The company has better results than its peers because of more exposure to Asia-Europe trade and better cost controls,' said Karen Chan, an analyst at Credit Suisse Group in Hong Kong. 'The strong profit growth is also due to a low base, as China Shipping was barely profitable a year earlier.' The company didn't say how much it planned to raise in the mainland share sale.
Spokesman Ye Yumang was unavailable yesterday as he was travelling. The company planned to hold a press conference in Hong Kong yesterday afternoon. Hong Kong-listed shares of China Shipping rose 4.3 per cent to HK$6.99 on Wednesday. The shipping line handled 3.33 million standard 20-foot containers in the first six months, 26 per cent more than a year earlier, it said. Sales rose 24 per cent to 17.38 billion yuan, of which 31 per cent came from Asia-Europe shipments. Sales on the Asia-Europe lane rose 31 per cent to 5.39 billion yuan in the first half. On Pacific routes, sales climbed 6.4 per cent to 6.8 billion yuan.
'China Shipping's performance will be even better in the second half,' said Ms Chan, who forecast a full-year profit of 1.84 billion yuan before the earnings announcement. Neptune Orient Lines Ltd, operator of Asia's fourth-largest container line, boosted its profit 38 per cent to US$93 million in the three months ended June 29, the first increase in seven quarters, it said on Wednesday.
Container-shipping ra-tes may climb 2 per cent next year followed by a 5 per cent rise in 2009, according to a Credit Suisse forecast. Meanwhile, China Shipping agreed to buy eight vessels from Korea's Samsung Heavy Industries Co for US$1.36 billion. China Shipping will fund the purchase from bank loans, its own resources and through 'capital-raising exercises', the Shanghai-based company said in a statement to the Hong Kong stock exchange yesterday, without providing details. The vessels will be delivered between December 2010 and May 2012, the company said. -- Bloomberg