Rising container prices propel Singamas profits
Shares in Singamas Container Holdings closed up more than 11 per cent yesterday after the world's second-largest maritime container maker saw interim net profit surge 899.8 per cent to a record US$101.9 million.
The firm's share price closed at HK$2.53, up 11.45 per cent, after climbing more than 17 per cent immediately after the half-year results were released at lunchtime.
Revenue rose 109.7 per cent to US$1 billion in the first half of this year, compared with revenue of US$488.4 million a year earlier.
Commenting on the results, vice-chairman Teo Siong Seng said he hoped 'the good result in the first half can continue in the second half and beyond'.
Teo said the increase was fuelled by a 113.6 per cent increase in revenue from container-making activities, which contributed 98.3 per cent of turnover. This came after the company sold 394,310 20-foot equivalent units (teu) in the first half against 236,190 teu last year, as shipping lines and container leasing companies expanded their box fleets.
The average sale price of a Singamas 20-foot container climbed to US$2,760 between January and June this year, compared with US$2,155 over the same period last year.
Singamas has about 34 per cent of the global shipping container manufacturing market.
Teo said the firm's 11 container-making factories operated at 93 per cent of capacity, producing an average of 75,000 teu a month, against 85 per cent utilisation in 2010.
He added that Singamas had one month's orders in hand but production had been cut to 60,000 teu per month between July and September in the face of possible power shortages during the hot summer months.
Teo said recent concern over the debt crisis in the United States and euro-zone economies had led shipping lines and leasing companies to scale back their orders for new boxes. He added: 'Shipping lines, banks and shippers see the crisis as temporary. We are confident demand will resume after the debt crisis' is resolved.
A container shortage meant current replacement rates, which would normally be 5 to 7 per cent per year of the existing fleet of 29 million teu, were exceptionally low.
Teo forecast the replacement rate would return to normal in the coming year, while 34 per cent growth in the container ship fleet between now and 2014 would also increase demand for new containers.
Teo said Singamas was investing in a container-making complex in Qidong, Jiangsu province, that will replace two factories - Shanghai Baoshan and Shanghai Reeferco - when the facility becomes fully operational by the end of next year.
Teo said the new Qidong plant, which will cover 546,670 square metres and be completed in two phases, would be more 'environmentally friendly, highly automated and more energy efficient' than the firm's existing facilities.
Singamas' annual container-making capacity when it opens its new Qidong plant. Its current capacity is 850,000 teu