The share price of CSSC (Hong Kong) Shipping surged by 20% on Wednesday as the company expects to have bagged a sizeable gain in net income in 2020.
In an earnings forecast, the Hong Kong-listed leasing arm of China State Shipbuilding Corp (CSSC) said last year's profit increased by 26% from the 2019 level of HKD 883m ($114m).
The company’s stock soared by HKD 0.22 to HKD 1.32 per share following the positive announcement.
CSSC Shipping said its profitability was boosted by more earnings from joint-venture vessels and lower finance costs last year.
Its full annual report is due by the end of April.
With its parent group being China’s largest state-owned shipbuilding conglomerate, the company has gone through rapid expansion in recent years.
CSSC Shipping had a portfolio of 130 vessels as of 30 June, compared with 117 ships at the end of 2019.
Most of the vessels are gas carriers, tankers, bulkers and containerships.
Strong appetite for LNG
In its interim report issued last August, the company said it would focus more on LNG shipping and other offshore clean energy projects due to the Covid-19 pandemic.
“During the time when the maritime industry is challenged, it is more conducive for the group to leverage the advantages derived from its industrial background and to expand the scale of its leasing business,” CSSC Shipping said then.
“The group will continue to be optimistic about the long-term opportunities of clean energy transition, and will continue to lead the investment in and financing of offshore clean energy equipment such as LNG and offshore hydrogen energy.”
Last October, Vista Shipping — its joint venture with Hafnia — ordered two 115,000-dwt product tankers that can run on LNG and conventional fuels.
The vessels are under construction at Guangzhou Shipyard International — part of the CSSC group — for long-term charters to Total upon their delivery in 2023.
While most ships in its portfolio are built by CSSC yards, the company has also been willing to fund vessels constructed outside China.
Last year, Turkey’s Ciner Shipping Industry & Trading sold two suezmax tankers — the Hyundai Heavy Industries-built, scrubber-fitted, 158,000-dwt Zeynap and Ayse C (both built 2020) — to CSSC Shipping and chartered them back on 10-year bareboat terms for $127m.
