An interest in a container manufacturer will allow the port operator to benefit from a sector upswing Analysts project that Cosco Pacific earnings will rise at least 10 per cent next year as planned acquisitions begin to contribute profits. The blue-chip port operator said it would buy 163.7 million non-tradeable shares of Shenzhen-listed China International Marine Containers (CIMC) from its parent company for 1.05 billion yuan, giving Cosco a 16.23 per cent stake in the container maker. 'It's a good deal,' said Michael Chan, head of research, transport and logistics at BOC International. 'Not only will the listed company benefit from the transaction, its parent can make use of the opportunity to get rid of the state-owned shares.' Cosco will pay about 6.45 yuan per share, representing a 40 per cent discount to CIMC's A-share closing price of 17.90 yuan. 'The low price allows Cosco Pacific to reap the upswing in container demand,' Mr Chan said. CIMC said last week its interim earnings jumped 178 per cent on soaring mainland trade. Net profit reached 933.96 million yuan, compared with 335.2 million yuan during the same period last year. Turnover jumped 75 per cent to 11.09 billion yuan. The container manufacturer is expected to report a net profit of more than 1.5 billion yuan next year, of which 243 million yuan will be booked by Cosco Pacific. 'It will boost Cosco's bottom line by at least 10 per cent,' Mr Chan said. Cosco Pacific expects the deal to bring synergy to its container-leasing business, which contributed 52 per cent of earnings last year. Container leasing last year generated a profit of US$80.27 million, up 6 per cent year on year. 'In addition to container leasing and container terminal operations, the company is committed to expanding its container-related industries,' Cosco said in a statement filed with the Hong Kong stock exchange on Thursday night. 'The management considers the proposed investment in CIMC ... as a good opportunity to strengthen the company's foothold in the growing container-manufacturing and sales industry.' However, the vertical integration would do little to diversify Cosco's business risk, a local analyst said. 'Container price is positively related to container-leasing price. Both companies will be affected at the same time if the market fluctuates,' he said.