Shipping trade boom propels COSCO Pacific profits

Beijing-backed container leasing firm and port investor COSCO Pacific Ltd. said Thursday first-half earnings more than doubled, thanks to China-driven growth in seaborne trade, although worries that the global shipping boom is past its peak have been a drag on its stock this year.

The company, 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.

It earned a restated US$93.15 million in the same period last year.

COSCO Pacific proposed a special dividend of 11.3 Hong Kong cents (US$0.015) per share, on top of an interim dividend of 28.1 HK cents. Last year's interim dividend was 17.4 HK cents.

A maiden contribution from the world's largest shipping container maker China International Marine Containers Co. Ltd. (CIMC) and profits from the disposal of its stake in Shekou Container Terminals Ltd. boosted COSCO Pacific's profits.

COSCO Pacific has a 16.2 percent stake in CIMC, which reported a nearly 120 percent rise in first half net profit to 2.05 billion yuan (US$253.8 million) in August.

Both of COSCO Pacific's core businesses, container leasing and container port investments, generated solid growth in the first half on strong demand from container shippers. COSCO Pacific is the world's fifth-largest container leasing firm with a 10 percent market share, and holds stakes in container ports, mainly in Hong Kong and China. However, worries that the global shipping boom of recent years has peaked have weighed on its share performance. COSCO Pacific stock has dropped about 3 percent this year, lagging a 6.9 percent gain in the blue chip Hang Seng Index.

"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.

The company's full-year earnings are forecast to grow by about 49 percent to US$307 million, according to forecasts of 21 analysts, but profits are expected to increase by just 7 percent in 2006.

COSCO Pacific also has a 20 percent stake in a small bank in Hong Kong, Liu Chong Hing Investment, which recently posted a 28 percent rise in six-month profit to HK$64.47 million.