(Yicai Global) Sept. 3 -- COSCO Shipping Holdings, which increased its net profit almost 32 times in the first six months of this year, will buy 10 container ships for USD1.6 billion to reduce its reliance on chartering in the buzzing transport sector.
China's largest shipping company and its Hong Kong-listed unit Orient Overseas International both released statements yesterday about the deals.
Orient Overseas penned agreements with two shipbuilders, Nantong-based COSCO KHI Ship Engineering and Dalian's COSCO KHI Ship Engineering, yesterday, with a single vessel costing USD157.6 million. The ships should be delivered between the fourth quarters of 2024 and 2025.
The two sellers are joint ventures between COSCO's controlling shareholder China COSCO Shipping Corp. and Tokyo-based engine manufacturer Kawasaki Heavy Industries. Thus, the agreements involve connected transactions.
COSCO is waiting to add 32 new ships, including the above-mentioned 10, to its fleet amid the booming logistics market caused by increasing trade and rising freight fares. Deliveries should take place between 2023 and 2025.
The latest order will help the container shipping giant to improve its transport capacity and cut costs, it added.
COSCO has had an incredible year. The firm boosted its net profit by almost 32 times to CNY37.1 billion (USD5.7 billion) in the first half from a year ago, according to its earnings report released on Aug. 30. Revenue jumped 88 percent to CNY139.3 billion (USD21.6 billion).
In July, COSCO inked a deal to build 10 container ships for USD1.5 billion. Those should be delivered between December 2023 and September 2024.
COSCO's stock price [SHA: 601919] rose 0.2 percent to CNY19.95 (USD3.10) in the afternoon. The shares have soared more than 90 percent this year.
Editor: Emmi Laine, Xiao Yi