China Shipping Development (CSD) moved to calm minority shareholders and nervous investors yesterday by saying it would retain more than 50 per cent of the dry-bulk shipping subsidiary it plans to spin off. The proposal, which management insists is not final, calls for CSD and parent China Shipping Group to inject some or all of their bulk shipping assets into a new company for listing on the Hong Kong exchange. 'Subject to the completion of the relevant valuation and obtaining approval from the relevant governmental authority, [CSD] currently expects to hold more than 50 per cent of the equity interests in Newco [the proposed new listed vehicle] upon completion of the restructuring,' CSD secretary Yao Qiaohong said in a statement to the exchange yesterday. The move was widely seen as designed to stem the decline in the value of the stock, which had fallen 19.4 per cent to $5.20 since June 10 when news of the proposed spin-off surfaced in analysts' reports. Shares in CSD recovered 5.7 per cent yesterday to close at $5.50 on the announcement. The bulk-shipping operations of CSD, which also derives income from oil procurement and transportation, accounted for 42 per cent of operating revenue last year, or 2.7 billion yuan. 'The chairman [Li Kelin] is intent on a separate listing for bulk business, and this was the only way he could do that without having the move vetoed by independent shareholders,' a shipping analyst said yesterday. 'We believe the parent's bulk shipping assets contribute about as much as the listed company [CSD], so this would make the profit impact not that significant.' The spin-off would create the state-owned group's third shipping play on the Hong Kong exchange, after CSD and China Shipping Container Lines. However, the market - led by some analysts who recommended selling CSD stock - reacted badly to the proposal because it would have shifted the company's core earnings strategy from the relatively stable China domestic bulk shipping sector to more volatile international oil shipments. Oil shipping firms typically trade at half the earnings multiples of their bulk counterparts.