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China Shipping Development books stellar rise in first half profit

China Shipping Development books stellar rise in first half profit
China Shipping Development Co (CSDC) saw its first half net profit soar even as revenue dropped due to government subsidies.

The Shanghai and Hong Kong-listed bulker and tanker arm of China Shipping Group (CSG) recorded a six-month profit of RMB299.15m ($46.96m), a jump of 602.1% from RMB42.6m in the same period of 2014.

The profit spike was attributed mainly to a one-time other income gain of RMB940.65m, of which RMB874m came from government subsidies under the scrap-and-build policy. The RMB940.65m other income gain in the first half compared to just RMB46.04m of gain in the previous corresponding period.

CSDC disposed of 27 dry bulk carriers during the first six months and took delivery of seven vessels.

First half revenue came up to RMB5.84bn, down 7.5% from RMB6.32bn in the same period of last year.

In the second half of 2015, CSDC said the demand-supply imbalance of the bulk shipping market will continue, but newbuilding orders have slowed down. The VLCC and suezmax sectors, on the other hand, are expected to see growth due to lower oil prices triggering demand.

Meanwhile, shares trading of CSDC continued to be suspended starting from 31 August pending a major announcement related to a merger between CSG and Cosco Group.

The trading suspension first started on 10 August and has been extended three times.