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Cosco, China Merchants face squeeze
2009/4/7
The mainland''s two leading port operators - Cosco Pacific and China Merchants Holdings International - are expected to show profits for last year, but this year is another matter, the South China Morning Post reported.
Analysts are not too optimistic about the two Hong Kong-listed firms, expecting the full force of the global financial crisis to seriously hurt their earnings this year.
It was only in last year''s fourth quarter that Hong Kong, Shenzhen and Guangzhou saw declines in container throughput, said Nomura analyst Jim Wong. Meanwhile, most other mainland ports had positive growth, albeit slower than before.
Wong forecast that Cosco Pacific''s net profit for last year would be US$271 million, a 36.7 percent drop from $428 million in 2007.
Cosco Pacific''s net last year, excluding one-off items would decline 2.5 percent, Wong said.
China Merchants'' net profit had risen 11.3 percent to $510.9 million last year, Wong forecast. Stripping out extraordinary items, the increase was 10.4 percent, he said.
However, Cosco Pacific''s container leasing and container manufacturing businesses performed poorly in the second half of last year, said Roslyn Ji, an analyst at Core Pacific-Yamaichi.
She forecast net profit of $327 million, 23.6 percent lower than in 2007 and would drop further to $281 million this year.
Half of Cosco Pacific''s earnings come from container leasing and container manufacturing, while the other half comes from ports.
Between 80 and 90 percent of Cosco Pacific''s port earnings come from ports in Greater China including Hong Kong and Shenzhen, Shanghai in the Yangtze River Delta, and Tianjin in the north.
A small percentage of earnings come from the firm''s investments in foreign ports such as in Singapore and Antwerp, Belgium.
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2009/4/7