Shipping boosts China Merchants

China Merchants Holdings (International) beat analysts' expectations with a better-than-expected 24.6 per cent growth in net profit on the back of strong shipping and port-related business.

The government-backed red chip recorded net profit of HK$878.06 million for the year to December 31, up from HK$704.47 million the previous year.

This beat a market consensus of HK$818.9 million.

Earnings per share were 42.94 HK cents, up from 35.81 HK cents a year ago.

The company recommended a final dividend of eight HK cents.

Shipping and port-related business, which rose 39.4 per cent to HK$533.9 million, fuelled earning growth. This business accounted for 60.8 per cent of the group's net profit.

China Merchants managing director Zhao Huxiang said its port business would continue to drive the company's earnings growth this year as it had recorded 26.5 per cent growth in container throughput in the first quarter.

President Fu Yuning said China Merchants would focus on the sector in the coming years and had budgeted HK$2 billion for annual capital expenditure on port-related business in the next two years.

China Merchants' turnover was up only 2.4 per cent to HK$1.38 billion during the year, due to a change in accounting policy.

It now books the shared profit from toll-road projects instead of consolidating the entire revenue into the group's accounts.

The disposal of a 60 per cent stake in Guangxi Gui Liu toll road contributed to the lower turnover growth rate, Mr Zhao said. Revenue from its toll-road business dropped 90.5 per cent to HK$27.6 million, while net profit fell 21.3 per cent to HK$172.1 million.

Although China Merchants expects the business to contribute stable growth, Mr Fu said no further investment would be made over the next two years.

He did not rule out the possibility of selling toll roads.

It has been rumoured parent China Merchants Holdings is planning to consolidate its interest in toll roads with the listed arm's toll-road business and seek an A-share listing for it.

The company also made a paper gain of about 1.5 billion yuan (HK$1.4 billion) on its B-share holdings, Mr Zhao said.

China Merchants has applied to the China Securities Regulatory Commission to change its untradeable legal person shares in B share companies China International Marine Container and China Merchants Shekou Holdings to marketable shares.

Meanwhile, 96.65 per cent of shareholders at Singapore-listed shipping arm Ming Wah accepted China Merchants' unconditional cash privatisation offer.