Shanghai Zhenhua Heavy Industries (ZPMC) has acquired CNY 420m ($62m) worth of shares in Cosco Shipping Holdings in what the Shanghai-listed company describes as a strategic tie-up that can help expand its port equipment and other maritime businesses.
According to exchange filings, ZPMC has used its own cash to buy around 111 million of Cosco’s Shanghai-listed A shares via a private issue at CNY 3.78 per share. This is roughly equivalent to 1% of Cosco’s total shares.
“Cosco’s parent is China Cosco Shipping, which is a major client of ours…this strategic equity investment is aimed at enhancing our cooperation in port equipment as well as offshore engineering, maritime services and logistics,” ZPMC said in a filing.
Listed in Shanghai and Hong Kong, Cosco is the container shipping and port arm of state conglomerate Cosco Shipping. ZPMC, controlled by state-owned China Communications Construction Group, is a major port equipment manufacturing aside from owning an offshore yard and more than 20 heavylift vessels.
“We are hoping to take advantage of Cosco Shipping’s influence on major port operators globally and enhance our relationship with them,” ZPMC said.
While the growth of its group revenues has flattened in recent quarters, ZPMC has experienced stronger demand for its port equipment and shipping services.
In January-June 2018, new orders for its port equipment amounted to $1.32bn, representing a year-on-year gain of 34%.
The company also saw revenue of its shipping segment reach CNY 314m in the six months, up 106% from the same period of 2017, having secured more Chinese and European clients.
