COSCO Pacific announced Monday it would acquire a 49 per cent stake of a sister firm, COSCO Logistics, in a bid to ride on the rapidly growing logistics business in China.

COSCO, which also reported 5.4 per cent growth in its first-half earnings Monday, signed a deal with parent China Ocean Shipping (Group) to buy the stake for a total consideration of 1.18 billion yuan (US$142.5 million) through its wholly-owned subsidiary COSCO Pacific Logistics (CPLCL).

COSCO Logistics, which posted a pro forma net profit of 183.8 million yuan (US$22 million) in 2002, provides freight forwarding, third party logistics and shipping agency in major cities such as Shanghai, Ningbo, Xiamen and Guangzhou.

Wei Jiafu, COSCO's chairman, said he expected logistics to become a new earnings generator for the company.

COSCO, which became the component of blue-chip Hang Seng Index in June, reported an improved interim net profit of US$73.6 million as the company expanded its container-leasing fleet by 12.8 per cent to 755,043 TEUs (twenty-foot equivalent units).

Turnover rose 8.4 per cent to US$125.8 million during the first six months of the year, and earnings per share improved slightly to US$3.43 cents.

The eight ports in Hong Kong and the mainland in which COSCO has stakes recorded 24.4 per cent throughput growth to 8.3 million TEUs during the same period.

COSCO proposed an interim dividend of 13.8 HK cents, slightly higher than 11 HK cents a year earlier. The company said it would maintain a stable dividend payout ratio of about 51 per cent in future.

Return on equity stood at 11.6 per cent. The company's chairman said COSCO would further enhance the ratio to 15 per cent by boosting performance in container leasing, container terminals and logistics in the future.

"We will strive to become one of the top 20 blue-chips of the benchmark Hang Seng Index in the coming years," Wei said.

According to him, COSCO now ranks 29th among the 33-member Hang Seng Index companies in terms of market assets.

As part of the efforts to achieve the goal, Wei said the parent company would inject all the container terminal business, both domestic and overseas, into COSCO.

In addition, COSCO will earmark US$370 million to invest in 20 new berths this year, with an estimated annual throughput of 10 million TEUs.

Liu Guoyuan, COSCO's executive vice chairman, said the company now has a total of 40 berth projects, which involved investment of US$700 million to US$800 million.

Liu also said that COSCO planned to issue 10-year fixed-rate bonds of US$300 million to pay for new port acquisitions and for refinancing purposes. The company has appointed ABN AMRO, Citigroup and Goldman Sachs as the lead managers for the deal. It will start the investor presentations in Hong Kong today and in Singapore on Thursday.

Pricing is expected shortly after the roadshow.

The deal will be completed by October subject to market conditions, the company's executives said.

Close

Today's Top News		Top Business News
+The next great leap after Shenzhou V ( 2003-10-21) +Hu calls for balanced development ( 2003-10-21) +Report: SARS not airborne virus ( 2003-10-21) +Japan urged to resolve weapons issue ( 2003-10-21) +Int'l AIDS group opens Beijing office ( 2003-10-21)		+Home-appliance giants want wheels ( 2003-10-21) +Exchange-rate reform under study ( 2003-10-21) +Health insurance sector called for ( 2003-10-21) +SanDisk teams up to open outlets ( 2003-10-21) +Housing prices start to sag in Shanghai ( 2003-10-21)