Cosco Shipping Holdings launches share buyback after posting H1 profit

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FILE PHOTO: A Cosco Shipping vessel is moored at PSA's Pasir Panjang container terminal in Singapore September 19, 2018. REUTERS/Edgar Su/File Photo

COSCO SHIPPING Holdings announced its 2023 interim results.

For the year to date, the container shipping market has faced new challenges such as weak demand, global supply chains restructuring and stricter green regulation.

COSCO SHIPPING Holdings has adhered to the “customer-centric” principle and accelerated the digital, intelligent and green low-carbon transformation. It continuously improved customer service quality and strengthened cost control, striving to stabilize its profit through various measures so as to actively fulfilling the role of delivering return to shareholders.

  • During the Reporting Period, the Company achieved EBIT of RMB24.7 billion. It realized a net profit of RMB19.68 billion, of which the net profit attributable to the shareholders of the Company was approximately RMB16.56 billion.
  • The Company actively promoted the digital transformation of its supply chain and made remarkable progress, thereby laying a solid foundation for it to withstand the cyclical fluctuations of the container shipping industry. It is the first time for the Company to disclose the revenue of supply chain excluded shipping charge, which is RMB14.5 billion,accounting for 16.4% of the revenue from the container shipping business, representing a year-on-year increase of 8.2 percentage points.
  • During the Reporting Period, the Company’s operating costs decreased by 35.82% year-on-year, reflecting its operational leadership in cost control capabilities.
  • As at the end of 30 June 2023, the Company’s asset-liability ratio was 48.56%, down approximately 2 percentage points from the end of last year. Its financial structure has been continuously optimized.
  • Based on the 2022-2024 shareholder dividend reward program of COSCO SHIPPING Holdings, and taking into account the sustainable development and shareholder returns, the board of directors recommended the distribution of a cash dividend of RMB0.51 (including tax) per share to all shareholders for the first half of 2023. It is expected that the total cash dividend payment will amount to RMB8.247 billion (including tax), which is approximately 50% of the net profit attributable to shareholders of the Company for the first half of 2023.
  • In order to maintain the Company’s value and shareholder rights and enhance investors’ confidence, and after taking into account the factors such as the Company’s financial position, future development needs and reasonable valuation, COSCO SHIPPING Holdings plans to repurchase 30 million to 60 million A-shares of the Company at the price not exceeding RMB12.29 per share. After the shares repurchase, all the shares repurchased will be cancelled and the registered capital will be reduced accordingly. In addition to repurchasing its A-shares, the Company also plans to implement H-share repurchase program within the general authorization framework approved by shareholders at the 2022 Annual General Meeting, the 2023 First A-share Class General Meeting, and the 2023 First H-share Class General Meeting. The Company expects that the total number of A-share and H-share shares that can be repurchased as of 14 February 2024 will not exceed 215 million shares.

In the first half of 2023, COSCO SHIPPING Holdings steadily promoted its global development, supply chain construction, digital intelligence and green low-carbon transformation, which to some extent alleviated the downward pressure on the industry.

New progress in the development of global layout. Since the beginning of this year, COSCO SHIPPING Holdings has put a number of new 20,000-TEU containerships into operation. Its shipping capacity thus steadily increased to approximately 2.91 million TEUs, further consolidating its market leadership in capacity. With the changes in the global trade pattern, COSCO SHIPPING Holdings has further strengthened its development in emerging markets, regional markets and third-country markets. While consolidating the shipping service network from China to South Asia, Southeast Asia and South America , it rolled out biweekly routes in Australia and New Zealand and the routes from Northwest Europe / the Mediterranean to the south coast of South America, thereby expanding the coverage of its core container shipping services. COSCO SHIPPING Port, a subsidiary of COSCO SHIPPING Holdings, also closely pays a attention to opportunities in emerging markets such as Southeast Asia, the Middle East and Africa, hence creating development synergy with the global network of the Company’s fleet. As for the channel construction, COSCO SHIPPING Holdings continued to increase the density of its port calls at Yangpu Port and Beibu Gulf Port in Hainan, strengthened various sea-rail intermodal transportation services such as the Western China land-sea trade corridor and the China-Europe Sea-Rail Express to facilitate international trade.

Latest development of full chain services construction. COSCO SHIPPING Holdings actively promoted the integration of modern service industry with advanced manufacturing industry and modern agriculture, further extended the entire container supply chain. The Company provided customized and personalized full chain solutions for leaders in emerging industries and strategic cooperative customers. The shipping volume of lithium batteries, photovoltaic and goods for cross-border e-commerce customers bucked the trend and sustained growth, and the vehicle export business was thriving. COSCO SHIPPING Holdings was committed to serving medium, small and micro customers, providing digital, standardized and efficient full chain services for them. The Company took advantage of our rich global resources to carry out trailer business in North America, developed warehousing and distribution business in Europe. The Company’s supply chain services in South America, Southeast Asia and other regions have seen phenomenal growth. And the full chain services began to take shape.

The upgrading of digital intelligence gathered momentum. COSCO SHIPPING Holdings rode on the industry trend to actively promote digital and intelligent transformation. It continuously strengthened the capability of service innovation and value creation. As for the building of digital supply chain platform, the “one-stop” customer portal was successfully launched, and the Shanghai Digital Intelligence Customs Platform was smoothly developed. The e-commerce platform Syncon Hub has successively launched a series of innovative integrated digital supply chain products, such as “Talent Pegasus+” and “HiAmerica Delivery”, to meet different market flows and customers in different industries. On the business information system construction, the Trailer Management System (TMS) and Warehouse Management System (WMS) were steadily promoted and implemented, and the intelligentization and visualization level of the full chain business continued to improve. In terms of innovative technology application, the scopes of blockchain electronic bills of lading and paperless delivery applications have been expanded to various areas, and the application scenarios were constantly enriched. They helped improve container shipping efficiency and customer experience, drive industry innovation and development, and the development of digital ecosystem.

New steps to promote green and low-carbon transformation. Since the beginning of this year, COSCO SHIPPING Holdings has closely followed the progress in legislative process and requirements of international and domestic green shipping regulations, which provided important basis for route design, charter planning, and fuel supply security. The construction of twelve 24,000 TEU methanol dual-fuel containerships ordered by the Company has started; and the world’s first 700 TEU electric container vessel used in inland waterways was planned to be delivered to the Company for operation within the year. All the onshore power facilities which should be built at the ports of COSCO SHIPPING Port were completed, and all of its berths have access to onshore power supply. The development of electric unmanned trucks, photovoltaic power generation at the port area, the conversion from oil to electricity, and the transformation towards hybrid power went ahead smoothly, whereby further enhancing the Company’s green development. At the same time, COSCO SHIPPING Holdings actively participated in the construction of green methanol supply chain system of COSCO SHIPPING Group, and conducted in-depth research on the biofuel market to provide support for the green and low-carbon transformation.

Looking ahead to the second half of the year, both of opportunities and challenges lie ahead in the global container market. New opportunities are emerging from the steady recovery of the Chinese economy, the rebound in freight rates on major routes in Europe and America, and new environmental regulations to promote the scrapping of old vessels. On the other hand, there are also various challenges derived from the evolution of the global economic and trade landscape, the inflationary pressure in Europe and America, and massive delivery of newly-built vessels. At the same time, customers have higher expectations for the low-carbon and more digitalized container shipping supply chain.

In this regard, COSCO SHIPPING Holdings will adhere to the mission of creating a “global digital supply chain operation and investment platform with primary focus on container shipping”, accelerate the development of resource layout for its global supply chain, promote technological innovation and digital transformation, implement the concept of green, low-carbon, and sustainable development, deepen lean management and cost control, and strive to provide low-carbon, intelligent and reliable container supply chain solutions to global customers, thereby building an efficient, smooth and safe circulation system for the world trade, providing better services to customers and creating greater value for shareholders.

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