Dalian Port plays down impact of China floods as stock falls
Hong Kong-listed Dalian Port says floods in the northeast of the mainland would have little impact on its bottom line in the second half because an increase in imports should offset the expected drop in grain exports.
Xu Song, general manager of the company, said that although the floods - described as the worst to hit some areas in a century by CCTV - would slash corn output and the firm's container throughput, demand for other grains, such as soya beans, would help make up for the losses.
Shares in Dalian Port fell 1.7 per cent in Hong Kong yesterday after rallying 13.3 per cent last week. The benchmark Hang Seng Index rose 2 per cent yesterday. The company's Shanghai-listed shares fell 9.7 per cent yesterday.
Port stocks had risen recently as investors anticipated the establishment of more free trade zones in the mainland.
"I don't see the flood having much impact on our total throughput as our business is pretty diverse," Xu said. "Container cargo is only one of our sectors."
The volume of corn, the port's major revenue driver in the bulk grain segment, handled by the port in the January-to-June period fell 2.3 per cent year on year to two million tonnes, while soya bean tonnage surged 46.8 per cent to 1.09 million.
The group expects its gross profit margin to stay at about 27 per cent in the second half. In the medium term, the shipping of cars would provide new revenue as the port's vehicle handling capacity would increase 87 per cent to 840,000 units when a new pier jointly developed with Shanghai Anji Automobile Logistics opened in 2015, said Xu. He added that demand for vehicle shipping in Dalian would reach 800,000 units by 2016.
The number of vehicles handled by the port jumped 49.2 per cent to 159,827 units in the first six months.