Cosco raises 15b yuan to buy new ships
(Shanghai Daily)Updated: 2007-06-20 12:53
China Cosco Holdings Co, operator of Asia's largest container line, sold 15
billion yuan (US$1.97 billion) of stock in Shanghai to buy new
ships.
Investors bought 1.78 billion shares at 8.48 yuan each, the top
end of the price range, on Monday, the company said in a Shanghai stock exchange
statement today. The sale was the fourth biggest in China this year, according
to Bloomberg data. 
The company plans to use the funds to help its container-shipping unit
pay for 12 new ships and to buy a stake in a logistics company. Shipping lines
are adding more vessels as Wal-Mart Stores Inc and other retailers sell more
Asian-made clothes, toys and televisions in the US and Europe.
"The
company needs to fund the expansion of its fleet and raising money in China is
very easy right now," said Ji Lijun, an analyst at Shanghai Securities Co." The
move is also in line with the government's directive to list more state-owned
companies on mainland stock markets."
The Tianjin-based company sold 535
million shares to strategic investors, 356.9 million to institutional investors
and 891.9 million to individual investors. Strategic investors have to hold
their shares for a year, while the lock-up period for institutional investors is
three months, the company said.
China International Capital Corp arranged
the sale.
Chinese companies have sold more than 130 billion yuan (US$17
billion) worth of shares in Shanghai and Shenzhen this year.
Ping An
Insurance (Group) Co, the nation's second-largest insurer, raised 38.9 billion
yuan in February in the largest domestic share sale this year.
China
Cosco plans to spend 6 billion yuan of the sale proceeds on new vessels it has
already ordered, according to a share sale document. It will also use 1.68
billion yuan to buy a 51 percent stake in Cosco Logistics from its state-owned
parent Cosco Group and another 401 million yuan for projects being developed by
the logistics unit.
China Cosco had a total of 26 container vessels on
order at the end of 2006, with a combined capacity of 166,320 twenty-foot boxes,
it said in March. Its Cosco Container Lines Co unit operated 139 vessels with a
combined capacity of 399,237 twenty-foot equivalent units at the end of last
year.
The price of ships is climbing because of higher demand. A new
vessel able to carry 6,200 20-foot standard containers cost a record US$105
million last month, 4 percent more than at the end of 2006, according to
Clarkson Plc, the world's biggest shipbroker. Shipowners ordered a record
US$105.5 billion worth of new vessels last year, according to the London-based
company.
Container-shipping rates have also gained this year. The Howe
Robinson Container Index, which tracks the charter market for container-shipping
lines on a weekly basis, stood at 1254.3 on June 13, according to the Korea
Maritime Institute. That's the highest since September 20.
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China Cosco raised HK$9.52 billion in an initial public offering in Hong Kong in June 2005. The shares, which rose 2 percent to HK$11.10 at 10:15am in the city, have more than doubled from their IPO price.
China Cosco aims to find new revenue sources as the launch of new vessels intensifies competition in the container-shipping industry. The global container fleet's capacity may increase about 14 percent over the next two years, while demand may expand 12 percent, Credit Suisse Group said in a February 5 report.
AP Moeller-Maersk A/S, owner of the world's largest container line, had a total capacity of 11.3 million units at the end of 2006, according to Containerisation International.
China Cosco also owns a 51 percent stake in Cosco Pacific Ltd., Asia's third-largest container terminal operator.
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