Cosco Shipping Energy Transportation (CSET) has vowed to establish the first VLCC pool in China after its board approved a proposal for a management entity in Hong Kong.
In an exchange filing, the Shanghai and Hong Kong-listed tanker arm of state conglomerate China Cosco Shipping said the pool entity would be set up by its subsidiary China Shipping Development (Hong Kong) to focus on charter and transport businesses.
According to the interim report of CSET, the company will be “working on the establishment of the first VLCC pool in China, facilitating the construction of the pool organisational structure, operating rules and information systems, and conducting internal simulations before introducing the pool to the market” during the second half of 2019.
Operated by an internal department established earlier this year, the pool has begun trial runs with tonnage committed by state-linked energy firm ZhenHua Oil and CSET itself.
The pool is expected to be continue trading CSET’s 52 VLCCs when formally established, making it one of the largest in the tanker market.
LNG and tanker boost results
CSET made the pool announcement as its first-half results improved on better performances of its oil and LNG shipping businesses.
The company’s revenues rose 40.2% year-on-year to CNY 7.06bn ($985m) between January and June, while net profits amounted to CNY470m compared with the year-ago losses of CNY 239m.
“The group accurately judged the market trend, traded at the market highs, and prospectively arranged fleet positions. The operating results of the VLCC fleet greatly outperformed the market,” CSET said.
Also, with the continued deliveries of newbuildings, CSET’s LNG shipping business saw pre-tax earnings rise 38.6% from the year-ago level to CNY 286m.
Better profitability for box and financing units
Other Cosco units listed in Shanghai and Hong Kong also enjoyed better financial results for the first half of 2019.
Cosco Shipping Holdings, which operates the group’s container vessels and terminals, saw revenues rise to CNY 71.8bn from CNY 45bn in the first half of 2018 following the acquisition of acquisition of Orient Overseas (International) Ltd (OOIL).
Net profits increased to CNY 1.16bn from CNY 40.8m.
“Cosco Shipping Holdings focused on improving the quality of shipping services, fully leveraged the advantages of scale and synergies after the acquisition of OOIL, and have achieved relatively good results,” the company said.
Cosco Holdings’ shipping volume reached 12.5m teu, representing an increase of 39.8% on year. Its port unit recorded a total throughput of 59.8m teus, up 5.4%.
Leasing arm Cosco Shipping Development recorded net profits of CNY 903m versus the year-ago level of CNY 327m, with lower spending in container manufacturing. Revenues dropped to CNY 6.85bn from CNY 8.24bn.
“During the period, the company vigorously explored new business areas on the basis of consolidating core business,” the company said.
“For the container leasing segment, the company incubated a mobile container rental project and strengthen the R&D in specialised container so as to persistently enhance its overall competitiveness.”
