Monday 30 July 2012

China Cosco Declines To Nine-Month Low After Loss Widens

By Bloomberg News - Jul 30, 2012
China Cosco Holdings Company Ltd. (1919), the country’s largest listed shipping company, fell to a nine- month low in Hong Kong after saying preliminary first-half loss widened more than 50 percent as a ship glut weakened rates.

The fleet operator dropped by as much as 4.3 percent to HK$3.15 before trading at HK$3.17 as of the noon trading break, the lowest since Oct. 10. The benchmark Hang Seng Index rose 1.5 percent.

Slowing global economic growth, including in China, and fuel costs that have remained high contributed to the record expansion of losses, China Cosco said in a statement to the Hong Kong Stock Exchange on Friday after the market closed. Losses will widen by half from the 2.8 billion yuan ($439 million) deficit for the six months ended June 30, 2011, according to the preliminary earnings report.

“A weak dry bulk market has been a major drag to China Cosco since 2008,” Bonnie Chan and Janet Lewis, analysts at Macquarie Capital Securities Ltd., wrote in a July 27 note. “It will take at least another two years for the dry bulk market to state a meaningful recovery from the current slump.”

The cost to ship Australian iron ore to China, the world’s biggest route for dry-bulk commodities, on a Capesize vessel reached a 17-month low on July 27 amid a shortage of cargoes of the steelmaking raw material. Rates fell 2.2 percent to $6.44 a metric ton, figures from the London-based Baltic Exchange showed. That was the lowest level since Feb. 8, 2011, according to data compiled by Bloomberg.

China Cosco, which made 48 percent of revenue from container shipping last year, booked a full year loss of 10.5 billion yuan in 2011. Net loss will probably be 2.67 billion yuan this year, according to the average of 10 analysts’ estimates compiled by Bloomberg.

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