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Container leasing firm and port investor COSCO Pacific Ltd said yesterday first-half earnings more than doubled, thanks to China-driven growth in seaborne trade and gains from the disposal of its interest in a Shenzhen terminal.
Although worries that the global shipping boom is past its peak have been a drag on its stock this year, the company said the global economy will continue to grow in the second half and it is well-positioned to take advantage of the growth.
"The Sino-US trade dispute has become clear and eased, and China's exports will continue to grow at high speed," Managing Director Sun Jiakang told a news conference.
Beijing viewed a newly signed textile deal with the European Union on Monday as setting the tone for a similar one with the United States to solve the disputes stemming from China's surging textile exports.
"These environments will all benefit our business," he added.
COSCO Pacific, a unit of newly-listed China COSCO Holdings Co Ltd, reported a net profit of US$214.77 million for the six months through June, beating an average forecast of US$203 million from five analysts polled by Reuters.
The net was up 131 per cent from a restated profit of US$93.15 million in the same period last year.
Its shares ended up 1.28 per cent at HK$15.85, helped by better-than-expected earnings.
But worries that the global shipping boom of recent years has peaked have weighed on its share performance. COSCO Pacific stock has dropped about 2.5 per cent this year, lagging a 6.6 per cent gain in the blue chip Hang Seng Index.
The company said it generated a profit of US$61.88 million from the sale of its 17.5 per cent stake in Shekou Container Terminals Ltd. and the gain would be distributed to shareholders as a special dividend.
It proposed a special dividend of 11.3 Hong Kong cents per share, on top of an interim dividend of 28.1 HK cents. Last year's interim dividend was 17.4 HK cents.
COSCO Pacific's 16.2 per cent owned China International Marine Containers Co Ltd (CIMC), the world's largest shipping container maker, contributed a profit of US$40.24 million in the first half of 2005.
Profits from its container leasing business rose 24.5 per cent to US$53.4 million. Total throughput in container terminal operations rose 17.6 per cent to 12.13 million 20-foot-equivalent units during the reported period.
COSCO Pacific holds stakes in container ports, mainly in Hong Kong and the mainland.
The company's full-year earnings are forecast to grow by about 49 per cent to US$307 million, according to forecasts of 21 analysts polled by Reuters Estimates, but profits are expected to increase by just 7 per cent in 2006.
"We are also a bit concerned that the ports in Hong Kong and Shanghai it is invested in are quite mature, and its hope that the ports sector will be the company's growth driver may not be delivered," said Oscar Choi, an analyst at DBS Vickers.
COSCO Pacific also has a 20 per cent stake in a small bank in Hong Kong, Liu Chong Hing Investment, which recently posted a 28 per cent rise in six-month profit to HK$64.47 million.
(China Daily September 9, 2005)
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