Temasek Holdings

Temasek nets HK$650m from China Cosco

PUBLISHED : Tuesday, 18 September, 2007, 12:00am
UPDATED : Tuesday, 18 September, 2007, 12:00am

Shares of China Cosco Holdings, the largest shipping conglomerate in China, continued to drop yesterday after its cornerstone shareholder, Temasek Holdings, cashed in part of its stake in the shipping company.

Temasek, the investment arm of the Singapore government, unloaded HK$809.6 million worth of its stake last week in an apparent move to lock in profit from the shipping stock ahead of a predicted flat year in container shipping next year.

It sold some 22.4 million shares at an average of HK$21.933 each and 14.6 million at an average of HK$21.79, according to a filing with the local stock exchange on Friday.

Temasek pocketed about HK$650 million in profit based on the HK$4.25 per share it paid during the listing in June 2005.

The shares sold represented 1.42 per cent of China Cosco, leaving Temasek with 10.87 per cent.

China Cosco closed at HK$20 yesterday, down by 0.7 per cent.

The stock had gained 340 per cent so far this year mainly on the success of its bulk-shipping acquisitions, which helped it outperform other Asian container shipping companies.

According to Clarkson, an international ship broker, container shipping capacity has increased to 11 million 20-foot equivalent units this year from 9.5 million TEU, representing growth of 16 per cent.

Supply growth will be 14 per cent next year and 13 per cent in 2009, according to a JP Morgan report. 'We remain concerned about the enormous amount of new capacity coming on stream as has been the pattern of past shipping cycles,' the report said. The securities firm predicts the freight weight will rise 2.5 per cent this year, then remain flat next year.

Cosco Holdings is expanding its fleet size. On September 8, Cosco Container Lines, a subsidiary of Cosco Holdings, signed a charter pact with Seaspan Corp for eight new 13,100-TEU capacity vessels to be delivered in 2011.

The term is for 12 years with daily rates of US$55,000 per vessel.