China Cosco to sell assets in fresh bid to avoid loss

China Cosco is disposing of two more assets for 3.67 billion yuan (HK$4.65 billion) to its parent firm in a last-ditch attempt to avoid a third year of losses.

Earlier sell-offs failed to prevent the country’s largest shipping firm from posting a net loss of 990 million yuan yesterday for the first half of the year.

While the loss was lower than market expectations of 1.42 billion yuan and marked a big improvement from a deficit of 4.87 billion yuan a year earlier, analysts said a persistent slump in shipping would keep Cosco from returning to the black this year in the absence of further disposals of assets.

A firm that reports three consecutive years of losses is liable to be delisted from the Shanghai Stock Exchange.

In its latest exchange filing, Cosco said it would transfer a majority stake in three commercial properties – estimated to be worth a total of 3.67 billion yuan – to Cosco Group. They are Sunshine Plaza and Cosco Plaza phase II in Qingdao, Shandong province, and Cosco Plaza in Shanghai’s Hongkou district.

China Cosco said the disposal should improve its earnings for the year and allow it to remain on the A-share market. It said the proceeds would be used as working capital for its core shipping business and to repay some debt.