Box demand seen surging as China export growth continues apace Singamas Container Holdings will spend about $550 million this year to increase its mainland production, with demand for steel shipping containers expected to remain robust despite soaring prices for iron ore and related materials. The small-cap will build its ninth mainland container factory at an undisclosed location in eastern Guangdong and relocate a smaller Tianjin facility to boost its annual production capacity by 33 per cent to 850,000 units. Consolidated earnings almost doubled last year, to US$39.63 million, on sales of US$532.79 million, 18.2 per cent higher. 'It was another good year for Singamas,' chairman Chang Yun-chung said. 'In light of the mainland's continuous export growth and increasing worldwide container traffic, we expect container manufacturing to be our major growth driver. 'We will continue to strengthen our manufacturing network to capture the region's arising opportunities,' he said. Singamas offered a full-year dividend of 16 cents per share, or a payout ratio of 30.6 per cent. The new factory in eastern Guangdong will have an annual capacity of 250,000 units by the first quarter of next year. The company's expansion costs will be funded by October's share placement, which raised about $338.5 million, and earnings. Singamas sold 574,000 containers last year at an average of US$1,750 per unit, up almost 28 per cent on 2003. However, chief executive Teo Siong Seng said it was now quoting second-quarter delivery prices at US$2,350. 'We took a number of low-price orders at the end of the fourth quarter last year, which we honoured,' Mr Teo said. 'With that in mind, it is reasonable to assume our net margin will improve this year.' He said total capacity would rise to 1.2 million teu (20-foot equivalent units) by the end of next year at an estimated cost of US$70 million. 'We will continue [looking] for meaningful investments this year, including the acquisition of existing factories,' Mr Teo said. 'But our resources will be stretched in the short term, so any project would have to be very attractive.' An additional 3.5 million teu of vessel capacity will be delivered by the world's shipyards by 2008, an expansion that Mr Teo said would drive demand for seven million new containers.