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China Ocean Shipbuilding diversifies to car parking business

China Ocean Shipbuilding diversifies to car parking business
China Ocean Shipbuilding Industry Group (Cosig) has taken steps to diversify from the sluggish shipping industry by investing in the car parking business.

Hong Kong-listed Cosig said it plans to invest up to HKD450m ($58.1m) to acquire an investment firm which owns Shandong Ruitong (Hong Kong) Parking Management Services Company.

“The acquisition represents a crucial step into the automotive parking management service business which could diversify the existing business activities of the group,” Cosig said in a regulatory filing to the stock exchange.

“In addition, the directors consider the acquisition, which includes manufacturing of intelligent automotive parking equipment and automotive device, would create a synergy by utilising the production capacity to the current shipbuilding production facilities by the group,” it added.

Cosig is engaged in the production and operation of shipbuilding, securities trading and providing financial services business.

Cosig pointed out that the sale and purchase agreement includes a profit guarantee that the acquired company would generate a profit of no less than RMB60m ($9.4m) in 2016.

Cosig will first pump in HKD67.47 by the allotment and issuance of 259.5m consideration shares on completion, and a maximum of approximately HKD382.53m by the allotment and issuance of 1.47bn consideration shares if the net profit of RMB60m is achieved in the agreed period.

In the first half, Cosig reported a loss of HKD282.5m, widening from the deficit of HKD222.3m in the previous corresponding period.