China Shipping Development (1138), the mainland's largest oil shipping company, expects bulk cargo rates to hover at high levels in the second half, but high oil prices could cloud its earnings picture.
Chairman Li Shaode yesterday said the impact on its business from subprime mortgage problems in the United States will be limited, but will depend on how the global financial market and economy are affected.
"We are more concerned about the high oil prices because a huge jump in oil price will erode our profit," Li said. He said hedging of oil prices will help the company, whose core business is shipping oil and coal, deal with costs.
In the first half, fuel expenses increased 12.8 percent to 1.35 billion yuan (HK$1.39 billion) compared with last year. This accounted for more than 44 percent of operating cost.
Operating a bigger fleet was a factor in rising fuel costs, but tighter controls helped to trim unit fuel cost by 10 percent. In addition to building new ships, Li said the company will lease more vessels to keep pace with demand.
The shipping giant sold 12 vessels of 5,000 deadweight tonnes each, booking a gain of 185 million yuan in the first half, said Wang Kangtian, chief financial officer. He expects seven more vessels to be sold in the second half, realizing a gain of between 80 million yuan and 100 million yuan.
Shares of China Shipping Development dropped 2.58 percent yesterday to close at HK$18.90 after it reported a 72.53 percent jump in interim earnings.
Net income was 2.23 billion yuan while turnover surged 29.7 percent to 5.81 billion yuan. It also anticipates its earnings for the first three quarters to jump more than 50 percent, helped by a larger fleet in operation.
The company also announced that its 50:50 joint-venture with Shenhua Energy will spend 1.12 billion yuan to build four more 57,000 dwt bulk vessels for coal transport.
Chairman Li Shaode yesterday said the impact on its business from subprime mortgage problems in the United States will be limited, but will depend on how the global financial market and economy are affected.
"We are more concerned about the high oil prices because a huge jump in oil price will erode our profit," Li said. He said hedging of oil prices will help the company, whose core business is shipping oil and coal, deal with costs.
In the first half, fuel expenses increased 12.8 percent to 1.35 billion yuan (HK$1.39 billion) compared with last year. This accounted for more than 44 percent of operating cost.
Operating a bigger fleet was a factor in rising fuel costs, but tighter controls helped to trim unit fuel cost by 10 percent. In addition to building new ships, Li said the company will lease more vessels to keep pace with demand.
The shipping giant sold 12 vessels of 5,000 deadweight tonnes each, booking a gain of 185 million yuan in the first half, said Wang Kangtian, chief financial officer. He expects seven more vessels to be sold in the second half, realizing a gain of between 80 million yuan and 100 million yuan.
Shares of China Shipping Development dropped 2.58 percent yesterday to close at HK$18.90 after it reported a 72.53 percent jump in interim earnings.
Net income was 2.23 billion yuan while turnover surged 29.7 percent to 5.81 billion yuan. It also anticipates its earnings for the first three quarters to jump more than 50 percent, helped by a larger fleet in operation.
The company also announced that its 50:50 joint-venture with Shenhua Energy will spend 1.12 billion yuan to build four more 57,000 dwt bulk vessels for coal transport.
