The Straits Times / The Business Times News on Cosco

SembMarine paring stake in Cosco S'pore

30 million Cosco shares fetching up to $60 million

MAINBOARD-LISTED SembCorp Marine is selling 30 million of its 180.4 million shares or 8 per cent stake in shiprepair and dry bulk shipping firm Cosco Corporation Singapore for up to $60 million.

The deal, handled by investment bank JP Morgan, is at a discount of 2 per cent to 5.9 per cent to Cosco's closing price yesterday of $2.04, but will still provide SembMarine with a substantial gain.

SembMarine - the world's second-largest offshore rig builder and a subsidiary of mini-conglomerate SembCorp Industries, which is also listed on the Singapore Exchange's main board - is selling the Cosco shares for between $1.92 and $2 each.

The shares in Singapore mainboard-listed Cosco are held as a portfolio investment and not as part of SembMarine's 30 per cent strategic stake in Cosco Shipyard group, which has several shipbuilding and repair yards in China.

SembMarine reported a 37 per cent rise in net profits for the three months ended Sept 30 to $44.7 million or 3.07 cents a share, from $32.7 million or 2.27 cents in the same period a year earlier. Group turnover grew 49 per cent to $673.3 million, from $451.2 million in the previous corresponding quarter.

In July this year, parent SembCorp Industries placed all its shipyard businesses under the umbrella of SembMarine for $183.73 million. SembMarine's order book now stands at more than $6 billion, with completions and deliveries stretching all the way to 2009.

Cosco, the ship-repair and bulk-carrier arm of China's biggest shipping company, recently posted its 13th straight quarter of profit growth, thanks to robust shiprepair orders for its Chinese yards. Its parent owns 51 per cent of Cosco Shipyard Group.

Net profit for Cosco's third quarter ended Sept 30 rose 26 per cent year on year to $71.5 million. Group sales rose 35 per cent to $317.8 million from $235.1 million a year earlier, fuelled by its core ship-repair and marine-engineering business.

Also helping was a one-time $19.4 million gain from the sale of its three remaining bulk carriers.