Qingdao Port lures terminal operator Cosco Pacific
Cosco Pacific in talks to buy a stake ahead of the port firm's listing in Hong Kong after China Merchants also expresses its interest earlier
Charlotte So and Anita Lam
Container and terminal giant Cosco Pacific is looking to invest in Qingdao Port before the port operator goes public in Hong Kong next year.
Cosco Pacific, which has two terminals in the port, said it intended to be the group's promoting shareholder before its listing.
"We heard through informal channels that the company's going to be listed in Hong Kong," said Alex Chen Bin, general manager of the investor relations department at Cosco Pacific. "We are now in discussions, but nothing can be announced yet."
The company is following in the footsteps of China Merchants Holdings (International), whose executive vice-chairman Li Jianhong said in June that it wanted to acquire a stake in Qingdao Port.
A senior manager from China Merchants, which already has a joint venture with the port, said becoming a shareholder could further deepen co-operation.
"Qingdao Port has a wide variety of cargo-handling capabilities, including iron ore, coal, fertilisers and paper. For terminals handling bulk cargo, a comprehensive logistics system with seamless connectivity is particularly important," said the manager, who asked not to be named.
Qingdao Port, the mainland's biggest port for crude oil and iron-ore imports, was reported two months ago to be planning an initial public offering of up to US$300 million, but the amount is said to have risen to US$500 million since then.
Joseph Chee, co-head of global capital market for Asia at UBS, said it was meaningless to speculate on the size six months before the intended listing as it could change drastically during the period.
While shares in port operators are not exactly popular among investors, Guosen Securities analyst Zhou Junyang said Qingdao Port had an edge over its peers.
"Its geographical location and water depth are more attractive than Tianjin Port, for example, and it is the country's biggest iron-ore port. I believe it could gain a better valuation," he said.
Port stocks in Hong Kong are inactive compared with shares in other sectors. Shares in Dalian Port and Tianjin Port are near a five-year low.
Qingdao Port had planned to list on the mainland since 2007, but it was forced to look elsewhere after regulators suspended IPOs there in October.
The firm operates four port areas, which can handle the world's largest container ships, very large iron-ore carriers, very large crude carriers and bulk vessels for coal and agricultural goods. It processed 407 million tonnes of cargo last year, including 14.5 million 20-foot equivalent units (teu) of containers, the company's website said.
In the first half of this year, the port's cargo tonnage jumped 11 per cent year on year to 230.5 million tonnes while container throughput grew 10.4 per cent to eight million teu.