Sinotrans Shipping has reaffirmed its commitment to double the size of its fleet, with plans for new and second-hand vessel acquisitions despite short-term concerns about the outlook for the dry bulk cargo market.
Senior executives gave no details about how many ships the company plans to buy, but executive director and general manager Tian Zhongshan said: 'Prices [of new and second-hand] vessels are more reasonable than before.'
Shipbrokers said the price for a new, 76,000 deadweight tonne bulk carrier, which forms the backbone of Sinotrans' fleet, had fallen from US$55 million in 2007 to US$33.8 million last year. The current price was about US$34.5 million.
By comparison, second-hand prices for a five-year-old vessel were about US$38.5 million, against US$88.5 million in 2007.
Tian said: 'We plan to find more opportunities in the market to enlarge our fleet.
'Dry bulk will remain the main business and it will be further enhanced and strengthened.'
The company pledged to build a fleet size of between seven million and eight million dwt when it listed on the stock market in November 2007. It now has a size of 2.3 million dwt and this will increase to 3.4 million dwt following the delivery of 11 dry bulk vessels from Chinese shipyards between now and the first half of next year.
Tian said the company has capital expenditure commitments on these 11 ships of US$285.3 million, but it also has more than US$1 billion in cash.
Turning to future prospects, he said the shipping sector expected 'that the second half of this year will not be as good as the first half. I think we have already seen the peak'.
He said a fall in seaborne trade and the arrival of new ships into the global fleet were among the pressures facing the industry, while rising iron ore imports into South Korea and Japan were positive factors.
Tian was speaking after Sinotrans posted net profit of US$58.5 million for the first six months, down 8.7 per cent from a year earlier.
Tian said the drop followed a decline in interest income.
Chief financial controller Xie Shaohua said operating and depreciation costs increased after the company took delivery of six ships between the second half of last year and the first six months of this year.
Revenue climbed 11.9 per cent to US$133.7 million, with dry bulk contributing US$124.1 million.
Revenue from the firm's single tanker, a 310,444 dwt very large crude carrier, surged to US$8.6 million from US$5.1 million, following better charter rates.
Revenue from the company's 10 small container ships was relatively stable at US$9.8 million, compared with US$10.8 million a year earlier.
Sinotrans will pay an unchanged dividend of 2 HK cents a share.
The company's shares declined 2.4 per cent to close at HK$3.30 yesterday.
Sinotrans Shipping will take delivery of 11 vessels by next year's first half
The net amount the company earned in the six months to June, in US$: $58.5mTopics: Bulk Carrier Sinotrans Shipping