Guangzhou Port Group to go public
Tim LeeMaster and Nevin Nie
Cargo handler plans to raise as much as US$750m in flotation
Guangzhou Port Group, an operator at China's third-largest cargo port, plans to raise up to US$750 million from an initial public offering in the fourth quarter, sources said.
The state-owned company could sell shares in Hong Kong before an offering on a mainland bourse but the product's final structure has not been decided. The offering will range from US$500 million to US$750 million depending on what assets end up in the listed company, a source said.
Director of publicity Li Pin said he had not heard of the listing plan.
Tianjin Port Development Holdings, an operator at the mainland's fifth-largest port, trades at 13.6 times expected earnings for this year. Its shares have risen 40 per cent since raising US$160 million from float in Hong Kong in May last year. On Friday, its shares fell 3.29 per cent to HK$2.64.
Shares of Xiamen International Port, an operator at the mainland's seventh-largest port, are up 17 per cent this year. They trade at 21 times expected earnings for this year.
The boom in ocean-borne shipping has been accompanied by a frenzy of port building on the east coast, though the pace of expansion may be about to slow.
'We're expecting lesser throughput growth of about 15 per cent in the port sector in the coming two years,' said Chris Tang, lead fund manager at Marco Polo Investment Group. 'The Pearl River Delta is pretty competitive and there's lots of new port capacity.'
Throughput at China's ports has grown 20 per cent annually in the past three years, according to Ms Tang.
Guangzhou Port Group handled 200 million tonnes of the 300 million tonnes of cargo that moved through the city's port last year, according to official data.
The port, which connects to 17 international routes and 39 domestic routes, has 639 berths and 47 container terminals. It plans to spend 20 billion yuan to expand annual capacity to 350 million tonnes of cargo and more than 10 million 20-foot containers by 2010.
Oil and coal handling accounted for 70 per cent of Guangzhou Port Group's profit in 2005.
Guangzhou Port Group said earlier this month it would seek government approval to begin the US$616 million third phase of Nansha Port this year.
Nansha Port, a deep-water development designed to cater to international shippers, began operations in 2005.
A.P. Moller-Maersk Group, the largest container shipping company in the world, plans to buy a 20 per cent stake in the second phase of Nansha Port, which is due for completion by the end of the year.
Under this deal Cosco Pacific, the world's fifth-largest container leasing company, would reduce its holding in Nansha to 39 per cent from 59 per cent. Guangzhou Port owns the remainder.
Guangzhou Port Group
Handled 200 million toones of the 300 million tonnes of cargo that moved through the city's port last year
Connects to 17 international routes and 39 domestic routes
Operates 639 berths and 47 container terminals
Derived 70 per cent of 2005 profit from oil and coal handling
Source: Company, Bloomberg