Shanghai port profit falls amid higher sales
Despite retaining its position as the world's busiest port for the second straight year, Shanghai International Port's earnings fell 13.7 per cent last year, and failed to meet market expectations.
Net profit fell to 4.68 billion yuan (HK$5.7 billion) even though revenue rose 13.3 per cent to 21.64 billion yuan, according to the company's preliminary estimate.
Analysts' consensus expectation was for the firm to maintain the same level of profits from 2010, said Jim Wong, an analyst at Nomura. In December, Shanghai's container throughput rose 7.4 per cent to 2.65 million twenty-foot equivalent-units (TEUs), according to Shanghai International Port Group, the Shanghai-listed operator of the city's port. That helped lift the city's container throughput for 2011 to 31.74 million TEUs, up 9.2 per cent from 2010.
The firm did not say why earnings had plummeted.
Over in Singapore, container throughput totalled 27.3 million TEUs for the first 11 months of last year, according to the Maritime Port Authority of Singapore. Barring a huge spike in throughput last December, Singapore should remain the world's second-busiest port. 'Shanghai will still remain the world's busiest port this year,' said Wong. 'If people are still negative for global trade in 2012, all other ports in the world would be impacted.'
Shanghai should maintain its momentum of modest growth in throughput this year, said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council.
The container throughput of Shenzhen, the second-busiest mainland port, saw an unusually sharp 7.6 per cent surge in container throughput to 1.93 million TEUs in December, according to the Shenzhen Ports Association. For the whole of 2011, Shenzhen's container throughput edged up 0.27 per cent to 22.57 million TEUs.
Given that Hong Kong's container throughput totaled 22.28 million TEUs in the first 11 months of 2011, Shenzhen is unlikely to overtake Hong Kong as the world's third-busiest port for last year.
Wong expects the first quarter of this year to be weak for mainland China's ports, but there will be a V-shaped recovery in the third quarter, based on Nomura's optimistic projections for the world economy.
Ho, however, said a V-shaped recovery was unlikely and instead forecast Shenzhen's container throughput would decrease this year, while Hong Kong's would stay roughly flat.
Shenzhen depends heavily on exports to the United States and Europe, whose markets will be weak this year, while Hong Kong's container throughput is boosted by the large amount of transshipment it handles, Ho said.
A Bank of America Merrill Lynch report predicted Europe's crisis would contribute to a steady deceleration of US growth this year.
Shanghai's throughput is boosted by domestic trade along the Yangtze River, and will thus gain from China's gross domestic product growth, which is expected to be about 8 per cent this year, according to Ho.
Last year, Shanghai International Port spent 22.5 billion yuan to raise its stake in Phase 2 and Phase 3 of Yangshan Port to 100 per cent, which was financed by an A-share issue, said Wong.