Singamas stays hopeful despite profit slump

Container maker expects growing demand and price rises after earnings plunge 56.5 per cent

PUBLISHED : Tuesday, 26 March, 2013, 12:00am
UPDATED : Tuesday, 26 March, 2013, 3:18am

Shares in Singamas Container fell 4.57 per cent to close at HK$2.09 after the firm said net profit plunged 56.5 per cent to US$60.35 million last year. Revenue dropped 15.5 per cent to US$1.54 billion.

But president and chief executive Teo Siong Seng is hopeful of a revival in fortunes this year, fuelled by growing demand for containers and a rise in average selling prices.

"We think demand might pick up at the end of April and May," he said, adding there were signs of an increase in cargo volumes on transpacific and intra-Asia routes.

He said Singamas' mainland box factories had forward orders until mid-May, with strong demand at its plants in southern China.

Teo said the average selling price of a 20-foot container was now US$2,400 for May delivery, up by US$200 from the end of last year. He forecast prices could rise to as much as US$2,600 by the middle of this year, buoyed by an increase in orders from container-leasing companies and an expected rise in raw material prices.

He predicted the delivery of new container ships would peak in the next two years. Shipping capacity would climb from 16.34 million teu (20-foot equivalent units) at the end of last year to 19.09 million teu by the end of 2016.

This increase would require 5.5 million teu of new containers, he said, adding the firm's annual box-making capacity would rise to 1.1 million teu this year with the completion of a new plant at Qidong in Jiangsu province.

Teo reiterated Singamas' aim to generate 40 to 50 per cent of revenue from specialist containers in two to three years from 29 per cent last year. These include refrigerated containers and 53-foot boxes used on the US road network.

He said the sale of specialist containers to China Railways had stopped since the central government decided to overhaul the Ministry of Railways. Domestic sales last year accounted for less than 5 per cent of the 572,000 teu Singamas sold last year.

Teo refused to say whether Singamas would sell some of its 11 depots and terminals.