Chu Kong defends terminal purchase
Red chip Chu Kong Shipping Development says a recent appraisal conducted by Colliers Jardine shows that the He Shan cargo terminal it is buying has a commercial value of more than 62 million yuan (about HK$57.6 million).
Chu Kong announced this week it would pay $19.04 million for a 40 per cent stake in the terminal that made an unaudited profit of 3.18 million yuan in the first 10 months of last year, against 7.27 million yuan in 1996.
Managing director Jackie Huang Jiangji would not project the terminal's full-year profits for last year, saying the figures, pending adjustments to comply with the Hong Kong accounting standards, would be 'substantially higher'.
He said the acquisition would do little to the bottom line, but said it would provide synergies to existing terminals of Dongguan Humen container terminal (30 per cent stake), and De Qing cargo terminal (40 per cent stake).
'The acquisition is not a big deal aimed at short-term stimulation of the share price. Rather we want to consolidate our fundamentals by acquiring assets that present good potential to the company.' He said the He Shan terminal would provide the company with opportunities for the development of its cargo operation business.
It handled between 40,000 twenty-foot equivalent units (TEUs) and 60,000 TEUs a year.
He would not say how many more it had to acquire from its parent company to meet its target of becoming a leading transport company.