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Port operator China Merchants Holdings (International) Co Ltd (CMHI) reported a 29.9 percent jump in its 2007 net profits to HK$3.41 billion, thanks to robust demand amid strong mainland exports.
Earnings per share reached HK$1.49, representing a growth of 36.6 percent. The company's shareholders can expect to receive a final dividend of HK$0.45 per share.
The group possess strategic investments in and operates 12 ports in Hong Kong and along the mainland coast. It recorded a total throughput of 47.12 million twenty-foot equivalent units (TEUs) last year. This represents a 17 percent increase over 2006.
CMHI Chairman Fu Yuning told reporters yesterday at the company's results announcement that cost reductions, energy savings and an increase in the operating efficiency of the ports under managements was behind the solid financial performance of the group.
Although Fu conceded that the slowing economies in the US and on the mainland are causes for concern, he remains confident that the impact on the group's profits will be minimal.
"Most of the mainland's exports to the US are basic consumption goods," Fu said, "The slowdown of the US economy should not decrease the consumption level of these goods."
Fu said the relatively cheaper prices of mainland-made goods will also make them more competitive in the international market amid a slowing economy.
Looking ahead, CMHI said it will continue to develop its foothold on the mainland's port business.
In March, the group invested 847 million yuan for a 5.4 percent stake in Ningbo Port Company.
"We are the second-largest stakeholder in the company, and we hope that there will be more opportunities in the future to increase our participation in the company," Fu said.
Other than mainland ports, CMHI also looks to move into the overseas market.
Fu said CMHI's parent company - China Merchants Group - had entered into the final phase of discussions in a Vietnam port project. The chairman said that Vietnam is the first step toward internationalization, and the group will take a step-by-step approach in its overseas expansion.
CMHI expects its capital expenditure (Capex) in 2008 to reach 450 million yuan. Most of the resource will go into port upgrades in Qingdao, Ningbo and its investment in Vietnam.
When asked whether the group will invest in the construction of the proposed Container Terminal 10 in Hong Kong, Fu said CMHI will have to look at the economic viability research of the terminal before making a decision. However, Fu said that CMHI believes the construction of a new container terminal will benefit the region.
CMHI shares inched up slightly yesterday, gaining 0.56 percent, or HK$0.20, to close at HK$36 before the result announcement.
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