70% Hike In Adjusted Profit For H1 By China’s Cosco Shipping, But Expects Impact Of Trade War

There has so far been mild impact of the US-China trade war, claimed Cosco Shipping Ports (CSP) which is amongst the largest container terminal operators in the world, as the company reported an increase of 70 per cent jump in adjusted profit for the first half the current year.

But the company also warned that the Top of Formimapoct impact impact impact of the trade war would be significant if it continues. A protracted trade will cause shipments moving China to Southeast Asia and South Asia.

The company beat market expectation for adjusted net profit for the first half of the year at $169 million compared to the figure of $99.3 million in the same period last year while excluding one-off items from the Qingdao Port International transaction. Year-on-year increase revenues was 80 per cent at $495.5 million. The company is owned by China’s Cosco Group.

There was also a 27 per cent increase in the amount of containers handled at 56.7 million teus for the first six months of the current year.

“The trade war impact is relatively mild [on our business] so far, as we have limited exposure to US trade,” Zhang Wei, vice-chairman and managing director for the Hong Kong-based port operator, said.

For the rest of the year, the company issued a “cautiously positive” outlook and said that it expected growth in throughput for fiscal 2018.to be around the low teens.

The business of the company in the long term is threatened to be impacted by the trade war, Zhang said as it also possess a threat to the overall economic outlook.

“Some products could be on the US’s next tariff lists, ” Zhang said. “As much as 10 per cent of shipments at our ports are related to US trade. They could be affected [by the trade war] eventually.”

Measures such as optimization of the cost structure and enhancing operational efficiency are already being taken by CSP to counter the possible negative result of trade war, he said.

He also predicted that trade would gravitate from China to Southeast Asia and South Asia because of the trade conflict, together with the long term strategy of China to enhance its industrial sector.

“We are closely watching how the shipping volumes may change or shift, and may seek potential investment opportunities in those regions [Southeast Asia and South Asia], ” he said.

On the other hand, a research report by Morgan Stanley said that the firm expects a slowdown in throughput in the second half of the year for CSP.

The trade tensions would also impact the profitability of the company, analysts also said in the report. An underperform rating for the stock was maintained by the bank.

(Adapted from SCMP.com)

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