China Shipping (Group), the parent of H-share China Shipping Development (CSD), is setting up a logistics conglomerate at a cost of at least 3.6 billion yuan (about HK$3.3 billion). The state-owned shipping giant's plan was unveiled yesterday as its SAR-listed subsidiary announced a 15.3 per cent year-on-year rise in net profit to 325.25 million yuan for last year. Li Shaode, vice-chairman of the H share and the parent company, said the group planned to build a logistics conglomerate to serve the entire China market. The company - to be named China Shipping Logistics - would be officially launched on April 18 to mark the shipping group's aggressive move into the logistics business. The logistics company would build a fleet of 12,000 trucks by 2010, Mr Li said. CSD had applied to the China Securities Regulatory Commission to issue 350 million A shares in Shanghai to finance a possible investment in the logistics company through its container shipping associate. CSD was expecting to receive approval soon from the securities watchdog. The rest of the A-share offering proceeds would be used to help acquire more vessels and repay a 828 million yuan bank loan borrowed last year to finance the purchase of four Panamax-type vessels, he said. CSD said yesterday its 25 per cent owned container shipping company, China Shipping Container Lines (CSCL), recorded a 1.12 billion yuan net loss last year due to the plunge in freight rates over the year. CSD incurred a 280.78 million yuan net loss as the associate dragged down the listed company's earnings. CSD shares dipped 10.65 per cent, or 18 HK cents, to finish at HK$1.51 yesterday after the company announced its results, which were below expectations. According to Thomson Financial First Call's consensus, analysts were expecting CSD to post a 30.4 per cent gain in net profit last year to 367.72 million yuan. Turnover rose 22.06 per cent to 3.89 billion yuan, slightly below market consensus of 3.92 billion yuan. Mr Li said CDCL was now in talks with more than 30 container shipping companies on various forms of co-operation to help stabilise freight rates. He expected rates to be stabilised by the middle of this year. Meanwhile, China Shipping Group would launch a new container shipping line linking Keelung Harbour and Los Angeles on April 1, which would be served by container vessels of 5,500-teu (twenty-foot equivalent units), Mr Li said.