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Cosco International profit drop, dithers on leasing plans

Cosco International profit drop, dithers on leasing plans
The services unit of the giant Cosco group, Cosco International, posted a 44% drop in net profit for the first half to HKD130.92m ($16.9m) as the continued slowdown in the industry inevitably impacted on its business, however its previously announced plan to diversify into the leasing business may be hampered by the greater needs of its parent, which seems to be currently pre-occupied with reviving its flagship China Cosco container shipping unit.

Revenue was almost flat at HKD4.46bn from HKD4.48bn previously as business volume slowed. There is an urgency to get into the business at the right moment, but there seems to be little progress on that front.

Cosco International managing director Xu Zhengjun told media at a results briefing that the current period was the best opportunity as the ship prices were low. He however alluded to slow progress at higher levels to push the plan forward.

Cosco International has a war chest of HKD5.74bn for acquisitions but has so far only made a small foray into German marine equipment supplier Hanyuan.

It may miss a golden opportunity to enter the leasing business if it does not strike a deal soon with its parent China Ocean Shipping (Group), since a recovery in global trade is likely to push ship prices up next year, say analysts.

To do so, Cosco International has to first clear the decks for such a move with other companies within the group - including China Cosco, the group's container shipping and freight forwarding arm - to avoid inter-company competition.

TAGS: Ports