Trade Winds 2023-08-31
Cosco Shipping Holdings has unveiled a programme to buy its shares after the market after delivering a liner industry-beating first-half profit.
The Hong Kong-listed company, which controls the container shipping units of the giant China Cosco Shipping group, said it will snap up between 30m and 60m of its shares at a price of up to RMB 12.29 per share.
That equates to a maximum spend of CNY 737m ($102m).
The company, which controls liner operators China Shipping Lines and Overseas Orient Container Line (OOCL), announced the share buyback plan after it reported a first-half profit of CNY 19.7bn ($2.7bn).
That’s a slump from the CNY 76.8bn earned in the same period of 2022, as the container shipping sector was booming.
But Alphaliner reported that the company’s results represent the largest profit of any container liner operator, as TradeWinds reported on Wednesday.
“For the year to date, the container shipping market has faced new challenges such as weak demand, global supply chains restructuring and stricter green regulation,” the Shanghai-headquartered company said in a statement on its first-half performance.
“Cosco Shipping Holdings has adhered to the ‘customer-centric’ principle and accelerated the digital, intelligent and green low-carbon transformation. It continuously improved customer service quality and strengthened cost control, striving to stabilise its profit through various measures so as to actively fulfil the role of delivering returns to shareholders.”
Cosco Shipping Holdings’ revenue slumped to CNY 91.8bn from CNY 211bn, but the container shipping giant also made a significant dent in its expenses, slashing its cost of services to CNY 72bn in the first six months of this year from CNY 113bn a year earlier.
The companies said the cut in operating expenses reflected its “operational leadership” in controlling costs.
TradeWinds reported on 21 August that OOCL posted an 80% decline in first-half profit, which fell to $1.1bn from the $5.6bn seen a year earlier.
John McCown, a former liner industry executive who now runs US-based Blue Alpha Capital, estimates that the container shipping industry delivered net income of $8.9bn in the second quarter, down 85.9% from the same period of last year and a slump of 35.2% from the first quarter of 2023.
“This is the fourth straight quarterly downturn after seven straight quarters of record net income for the sector driven by significant pricing increases across most container lines,” he wrote in a note to clients.
“The quarterly downturn since the second quarter of 2022 shows signs of ameliorating.”