CHINA Cosco Holdings Co, the country's biggest shipping line, has filed a first half profit warning to the Shanghai Stock Exchange while also predicting an 85 per cent narrower loss of CNY4.87 billion (US$794 million).
The state-run enterprise has posted losses for two consecutive years, and is expected to sell part of its US$1.6 billion in property to avoid a delisting under Shanghai Stock Exchange's three losses and you're out rule, Reuters reports.
The first half's narrower loss was222222 attributed to one-off gains from asset sales, the company said. Analysts say it will need to sell more assets, most likely its office buildings, to stay in the black in 2013.
"It's difficult to have a full-year turnaround with just earnings from its core businesses, so continuous disposal of its assets is the way to go," said Lawrence Li, an analyst with UOB Kay Hian in Shanghai.
"Shipping industry fundamentals remain challenging and we don't see an industry recovery in second half based on the current supply and demand outlook," Citigroup analysts told Bloomberg.
"Getting rid of loss-making businesses, getting rid of non-core competency businesses, as well as selling those that can generate good profit relative to bookholding value - we have seen quite a few examples," said Timothy Ross, head of Asia-Pacific transport research at Credit Suisse in Singapore.
"These guys have gone through very tough years in five out of the past six years, which has put a lot of pressure on their balance sheets," Mr Ross told Reuters.
China Cosco, based in Tianjin, is restructuring assets in a bid to return to profitability. The company may gain CNY3 billion from earlier disposals of its logistics unit and a stake in a container maker and may sell more assets, according to analysts.
Cosco Group replaced its chairman, Wei Jiafu, a prominent figure in the shipping industry. China Cosco didn't say when it will report interim results.
In 2012, China Shipping Container Lines (CSCL) sold a fifth of its container fleet to raise cash, while Maersk sold some of its tankers to release capital for future investments
CMA CGM, the world's third-largest container shipper, sold most of its terminal business to boost finances as the group emerges from a turbulent three years in a volatile global freight market.
WORLD SHIPPING
01 August 2013 - 21:14
Cosco to post 85pc smaller loss, but sell-off needed to avoid de-listing
CHINA Cosco Holdings Co, the country's biggest shipping line, has filed a first half profit warning to the Shanghai Stock Exchange while also predicting an 85 per cent narrower loss of CNY4.87 billion (US$794 million).
WORLD SHIPPING
01 August 2013 - 21:14
Cosco to post 85pc smaller loss, but sell-off needed to avoid de-listing
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