Singapore's PSA wins tender to buy stake in major Jiangsu port
The Singaporean company wins bid to buy stake in major Jiangsu container port
Singapore's PSA International yesterday added another mainland container port to its portfolio after winning a tender floated by China Shipping Container Lines for its stake in a major port in Jiangsu.
The transaction will fetch only 260 million yuan (HK$330 million) in proceeds for CSCL, according to the cash-strapped shipping company's filing to the Shanghai Stock Exchange.
It would hardly cover the net loss of 1.67 billion yuan it incurred for the first nine months of the year.
Shipping companies, including the mainland's largest carrier China Cosco, have been dumping assets this year in the wake of heavy losses as a result of a downturn in the shipping industry. But CSCL is not as desperate for cash as China Cosco, which faces delisting from the Shanghai Stock Exchange this year if it fails to return to the black.
In its latest filing, CSCL said it would sell its 55 per cent stake in Lianyungang port for 756 million yuan. The Lianyungang city government will acquire 6 per cent while PSA the remaining 49 per cent because the government is required to keep a controlling stake in port assets.
The latest acquisition is the latest in the Singaporean operator's efforts to expand in China. It already has 37 berths in seven terminals across five cities. Recently, it invested in the country's gateway port of Fujian Jiangyin International Container Terminal, which is next door to a feeder port in Fuzhou, where it also has a stake.
PSA yesterday said in a press statement that its latest acquisition is the group's first foray into the Yangtze River Delta region and Lianyungang was important because it was located midway between major sea and rail cargo routes connecting China, Europe, the United States and the rest of Asia.
The port made a net profit of 142 million yuan in the first three quarters of the year, 4.76 per cent more than in the same period last year despite an 8.57 per cent drop in revenue.
Analysts say the port is facing intense competition from its rivals in Qingdao and Rizhou, which prevents it from lifting rates despite growing imports of consumer goods into China.
The setting up of the so-called P3 alliance by the world's three largest liners - Maersk, MSC and CMA CGM - will further intensify the competition for cargo as sailings and port calls are reduced.