Hong Kong: China Merchants Holdings (International) Co Ltd said it is to take a 45% stake in Zhanjiang Port (Group) Company Ltd for 1.62bn yuan, confirming an earlier report in the South China Morning Post.
The joint venture has registered capital of 3.6bn yuan with the remaining 55% stake owned by the Zhanjiang local government.
Zhanjiang Port, in southwestern Guangdong province, achieved total cargo throughput of over 50m tons in 2006, approximately 80% of which was iron ore and petroleum.
China Merchants said the investment in Zhanjiang Port is a strategic move to fill its gaps in southwestern China and to complement its strategic network of mainland ports.
The company said the stake will also enable it to enter the large bulk cargo terminal sector, which is a source of steady income and would thereby strengthen its ports business while creating a new profit driver.
'The HK$1.62bn purchase is really a 2010 story given entry cost and structure,' Citigroup said in a research note.
'This is the first significant foray into bulk and is based on the company's view that bulk acquisitions more attractive than container given current asking prices. A new railway and new 20m ton Baosteel plant are expected to stimulate growth after 2009-10,' the bank added. [17/09/07]
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