K-Line shares soar on higher-profit expectations

Shares of Kawasaki Kisen Kaisha Ltd (K-Line), Japan's third-largest shipping line by sales, led gains by the country's carriers on expectations that K-Line would raise its profit forecast because of higher container rates.

The stock rose 4.1 per cent to close at 1,664 yen (S$20.70) yesterday, after climbing to a record 1,670 yen. Shares of Mitsui OSK Lines Ltd, Japan's second-largest shipper, rose as much as 2.6 per cent to end trading at 1,828 yen.

It earlier reached a record 1,837 yen.

K-Line beat its fiscal first-quarter operating profit target by 20 per cent, as China's rising exports boosted container shipments, its president, Hiroyuki Maekawa, said last week. The company gets almost half of its sales from shipping containers.

'Without a doubt, Kawasaki Kisen will raise its full-year profit forecast,' said Yoshihisa Miyamoto, an analyst at Okasan Securities Co.

'Container shipping demand is firm and the shares look cheap.' Tokyo-based K-Line is due to announce its earnings for the three months ended June 30 next week.

In May, it forecast that full-year net income would rise 22 per cent to 63 billion yen.

K-Line raised rates for shipping 40-foot containers to North America from Asia in its yearly negotiations settled in May, said MrMaekawa, without disclosing the price.

The average price for shipping a smaller 20-foot container to the US west coast from Asia in the three months to March 30 was US$1,643, according to Containerisation International magazine.

Mitsui OSK expects full-year profit to rise 7.5 per cent to 130 billion yen. Nippon Yusen KK, Japan's largest shipping line by sales, predicts a 26 per cent gain to 82 billion yen.

Nippon Yusen's shares advanced 1.5 per cent to 1,196 yen yesterday.

They are up 37 per cent this year, compared with a 79 per cent gain for K-Line and a 56 per cent increase for Mitsui OSK.

K-Line shares may gain as much as 11 per cent to 1,850 yen in the next six months, Mr Miyamoto said. Mitsui OSK may rise as much as 9 per cent to 2,000 yen, he added.