China Merchants to expand into resource ports
Port operator China Merchants Holdings (International) Co Ltd, which posted a 26 per cent rise in first half earnings on Wednesday, plans to focus more on resource and energy-related bulk cargo terminals in coming years, hoping to ride a Chinese-driven global trade boom.
The firm and its partners ultimately plan to spin off Zhanjiang Port in an initial public offering.
After investing in terminals across China's main container shipping hubs, Merchants has now agreed to pay 1.62 billion yuan (S$325 million) for 45 per cent of Zhanjiang Port, a bulk cargo port in China's southern Guangdong province.
'Zhanjiang will be the first of our large bulk cargo terminal investments, which will become a new growth area for the company,' chairman Fu Yuning told reporters on Wednesday.
The firm and its partners ultimately plan to spin off Zhanjiang Port in an initial public offering to finance an expansion expected to cost more than four billion yuan over the next five years, he added.
China's rapacious appetite for resources is driving its bulk cargo terminal business, especially when it comes to resource- and energy-related bulk commodities.
Merchants, China's largest container terminal operator, said its net profit rose to HK$1.52 billion (S$294 million) in the first six months of 2007 from HK$1.21 billion the previous year on the back of strong international trade.
This beat an average forecast of HK$1.48 billion made by Lehman Brothers and Merrill Lynch.
Its shares hit a record HK$47.25 after the results but eased slightly to close the day up 5 per cent.
The Hang Seng Index also rose 4 per cent on a larger than expected interest rate cut by the US Federal Reserve.
In the first six months, Merchants handled 22.16 million twenty-foot-equivalent units of goods, up 20 per cent.
Shrugging off worries over an economic slowdown in the United States, Mr Fu said any possible impact could, to a certain extent, be offset by growth in the European Union, Japan and emerging economies.
Analysts said China Merchants had moved beyond a restructuring phase and should embark on asset acquisitions to underpin future earnings and share price growth.
The company is expected to sign an agreement within this year to develop a port in Vietnam with a total investment of US$1 billion, Mr Fu said.
China Merchants' state parent signed a cooperation memorandum of understanding with Vietnam National Shipping Lines this year to jointly develop Vietnam's Ben Ding Sao Mai Seaport and related establishments.
The group's ports business is typically conducted through its Hong Kong listed arm. But Mr Fu said the shareholding structure has not yet been finalised.
'The project will eventually have six container berths and it will need US$300 million initially to build two berths in the first phase,' Mr Fu said.
The firm and its partners ultimately plan to spin off Zhanjiang Port in an initial public offering.
After investing in terminals across China's main container shipping hubs, Merchants has now agreed to pay 1.62 billion yuan (S$325 million) for 45 per cent of Zhanjiang Port, a bulk cargo port in China's southern Guangdong province.
'Zhanjiang will be the first of our large bulk cargo terminal investments, which will become a new growth area for the company,' chairman Fu Yuning told reporters on Wednesday.
The firm and its partners ultimately plan to spin off Zhanjiang Port in an initial public offering to finance an expansion expected to cost more than four billion yuan over the next five years, he added.
China's rapacious appetite for resources is driving its bulk cargo terminal business, especially when it comes to resource- and energy-related bulk commodities.
Merchants, China's largest container terminal operator, said its net profit rose to HK$1.52 billion (S$294 million) in the first six months of 2007 from HK$1.21 billion the previous year on the back of strong international trade.
This beat an average forecast of HK$1.48 billion made by Lehman Brothers and Merrill Lynch.
Its shares hit a record HK$47.25 after the results but eased slightly to close the day up 5 per cent.
The Hang Seng Index also rose 4 per cent on a larger than expected interest rate cut by the US Federal Reserve.
In the first six months, Merchants handled 22.16 million twenty-foot-equivalent units of goods, up 20 per cent.
Shrugging off worries over an economic slowdown in the United States, Mr Fu said any possible impact could, to a certain extent, be offset by growth in the European Union, Japan and emerging economies.
Analysts said China Merchants had moved beyond a restructuring phase and should embark on asset acquisitions to underpin future earnings and share price growth.
The company is expected to sign an agreement within this year to develop a port in Vietnam with a total investment of US$1 billion, Mr Fu said.
China Merchants' state parent signed a cooperation memorandum of understanding with Vietnam National Shipping Lines this year to jointly develop Vietnam's Ben Ding Sao Mai Seaport and related establishments.
The group's ports business is typically conducted through its Hong Kong listed arm. But Mr Fu said the shareholding structure has not yet been finalised.
'The project will eventually have six container berths and it will need US$300 million initially to build two berths in the first phase,' Mr Fu said.
