China shipping giant gets nod for A-share IPO

BEIJING—China Shipping Container Lines Co.,Ltd. (CSCL) Friday got nod from the China Securities Regulatory Commission for its A-share initial public offering (IPO), sources with the industry watchdog confirmed Saturday.
The company, which owns and operates the country’s largest container fleet, plans to raise at least 12 billion yuan (1.6 billion U.S. dollars) through the issuance of 2.34 billion new A shares.
The new A-share issuance would account for 20 percent of the total number of stocks issued, according to the company’s prospectus to the CSRC. After the issuance, the State-owned China Shipping (Group) Company would decrease its stake in CSCL, which is already listed in Hong Kong, from 59.87 percent to 47.89 percent.
The company announced that 8.8 billion yuan of the proceeds would be used to buy eight container ships in China and an additional eight from overseas. About two billion yuan would be used to purchase assets, including stakes in container leasing companies, and 1.2 billion yuan would be earmarked for replenishing cash flow and paying banking loans.
As the world’s 10th largest container liner, the Shanghai-based CSCL now manages 151 container ships. Its total operating capacity ranks sixth in the world at 427,107 TEU. The company operates 74 international lines and 17 domestic lines, according to China Daily.
CSCL’s total assets amounted to 32.86 billion yuan by the end of June this year. Its operational income was 17.46 billion yuan, and profit was 1.44 billion yuan in the first six months. The earnings per share were 0.203 yuan. UBS Securities and China International Capital Corporation Limited would sponsor CSCL’s stock issuance. The company’s H share fell 6.6 percent on Friday to close at 6.35 yuan per share.
Analysts said that the profits of container companies are expected to undergo a mild rise in 2008. “The US subprime mortgage troubles could lead to the slowdown of world’s economy and trade, which is expected to result in shrinking container demand,” Wu Li, an analyst of TX Investment Consulting Co., Ltd., was quoted as saying by the English newspaper.
Shipping capacity’s growth worldwide is expected to decrease to 13 percent in 2008 from 15 percent this year due to a global decrease in orders, Wu said. “But soaring operational costs, triggered by rising oil prices, will push the company to raise prices, which is expected to cover the increased costs,” Wu added.
Gao Shiliang, an analyst at Central China Securities, said the international shipping container market is expected to continue tore bound next year.—Xinhua