Beihai Port beefs up for trade boom
Guangxi port to take over two other terminal operators and tugboat firm for 5.2b yuan as exports to Asean take off
Beihai Port will acquire two other ports and a tugboat company on the mainland for 5.18 billion yuan (HK$6.41 billion).
It will also raise 1.73 billion yuan to boost booming trade between the Guangxi region and members of the Association of Southeast Asian Nations.
The Shenzhen-listed firm said it would issue 690 million shares at 7.51 yuan each to wholly own Qinzhou and Fangchenggang ports and take a 57.57 per cent stake in the tugboat company.
Beihai, Qinzhou and Fangchenggang ports are on the Guangxi Beibu Gulf. All three port operators are owned by the Guangxi Beibu Gulf International Port Group, which in turn is controlled by the Guangxi government.
Beibu Gulf International began its asset injection in 2008, which came to a halt in 2009 amid the global financial crisis, Beihai Port said.
It also said it would issue an additional 230 million shares to up to 10 investors to raise 1.73 billion yuan as working capital.
"This transaction will inject the port assets of Qinzhou and Fangchenggang into Beihai Port, combining all the Beibu Gulf ports under one listed company, which realises the objective of Guangxi and the nation to create a super port in the Beibu Gulf Economic Zone. This transaction will improve the quality of the company's assets and enhance its profitability," Beihai Port said.
However, Zhonglei Certified Public Accountants forecast Beihai Port's net profit would drop 8.7 per cent to 529.74 million yuan this year, while turnover would soar 57.4 per cent to 4.64 billion yuan, assuming the deal went through.
This transaction would also prevent competition among the three ports, Beihai Port said. The three port operators recently signed a non-competition deal.
The takeovers are subject to the approval of the China Securities Regulatory Commission.
"Southeast Asia is very important to Guangxi," said Steve Lo, the chairman of the Chamber of Hong Kong Logistics Industry.
Asean is Guangxi's biggest trading partner, accounting for 36.2 per cent of the province's international trade, according to Guangxi's customs authorities.
Guangxi has benefited from the establishment of the China-Asean Free Trade Area in January 2010. In the first half of this year, Guangxi's trade with Asean rose 20.9 per cent to US$4.75 billion, after soaring 46.6 per cent to US$9.56 billion last year.
In May, Guangxi officials conducted investment promotion activities in Hong Kong. Agreements were reached on 26 projects totalling 28.7 billion yuan for the Beibu Gulf economic zone, in a sign of co-operation between Hong Kong and Guangxi in promoting free trade between mainland China and Asean, according to the Guangxi government website.
Lo said it was good for mainland China to increase its trade with Asean, given that its exports to Europe had dropped and its trade with the United States had improved only slightly.
Mainland China's exports to Asean rose 16.6 per cent to US$144.7 billion in the first nine months of this year, while those to the European Union fell 5.6 per cent to US$250 billion.
Shipments to the US grew 9.6 per cent to US$258 billion, according to the Ministry of Commerce.
In the first half, Fangchenggang had a turnover of 715 million yuan and a net profit of 177.48 million yuan, while Qinzhou reported a net profit of 44.66 million yuan on a turnover of 190 million yuan.