Bullish China Shipping goes large after first half profit surge

Bullish China Shipping goes large after first half profit surge    China Shipping Container Lines’ aim of becoming a top five box line is close to becoming a reality after the state-run carrier placed a $1.36 billion order for eight 13,296-TEU containerships from Samsung Heavy Industries on the same day it reported a 13-fold increase in first half net profits.
   To fund the vessel spree, China Shipping plans to issue up to 1.5 billion yuan-denominated A shares on the Shanghai market, representing 20 percent of its enlarged share capital. No issue price has been set, but based on its last trading price of HK$6.99 (89 cents) on Thursday before the shares were suspended from trading, that company would net about HK$10.5 billion ($1.35 billion).
   The order shows the company’s confidence in the strength of the container-shipping sector, which is showing signs of recovery after last year’s downturn. China Shipping’s first half profit soared to RMB1.15 billion ($152 million) from RMB81.2 million last year after significant freight rate increases.
   “In the first half of 2007, with the recovery of the shipping industry, the freight rates for the group's international trade routes represented by the Far East/Europe trade route, and domestic costal trade routes have successively achieved strong growth,” China Shipping said in a statement.
   Operating income for the first six months was RMB1.58 billion ($209 million), up 283 percent against RMB413.7 million in the previous year. Revenue improved 24.4 percent to RMB17.4 billion ($2.28 billion) from RMB14 billion in the 2006 first half.
   The higher profits followed a 25.8 percent increase in China Shipping’s global container volume to 3.3 million TEUs, up from 2.6 million TEUs a year ago.
   China Shipping’s containership fleet amounted to 427,107 TEUs as of June 30, making it the world’s sixth-largest container line, only some 60,000 TEUs behind fifth place Hapag-Lloyd.