(Bloomberg)
Updated: 2007-08-10 09:25

China Shipping Container Lines, the second-largest Asian carrier of sea-cargo boxes, plans to sell domestic shares this year after first-half profit jumped more than 14-fold on higher prices on more cargo.

The share sale will finance the purchase of new ships and the repayment of loans, the Shanghai company said. First-half net income rose to 1.16 billion yuan, or $153 million, from 81.2 million yuan last year.

China Shipping's first-half profit rose as rates for Asia-Europe shipments climbed more than 20 percent from a year earlier, according to a spokesman. The higher rates and China's booming stock market spurred China Shipping's larger rival, China Cosco Holdings, to sell 15 billion yuan worth of Shanghai-listed A shares in June.

"It's a good time to sell A shares," said Edward Wong, an analyst for Quam in Hong Kong. "Investors are more willing to buy stocks at high valuation."

China Cosco, Bank of Communications and other Chinese companies have raised almost $20 billion in mainland share sales this year, according data complied by Bloomberg. The benchmark CSI 300 index has more than doubled during the period and reached its latest record high this week.

Chinese exports rose 27 percent to $546.7 billion in the first half, while imports increased 18 percent to $434.2 billion. About 90 percent of world trade moves by sea.

Hong Kong-listed shares of China Shipping, which have more than tripled this year, were suspended from trading Thursday after gaining 4.3 percent to 6.99 Hong Kong dollars, or 89 U.S. cents, on Wednesday.

In June, the company issued 1.8 billion yuan worth of bonds to buy 12 vessels, as it seeks to expand its fleet to 162 ships by 2009. It said Wednesday that it was buying eight ships for $1.36 billion from Samsung Heavy Industries of South Korea.

The shipper said it handled 3.33 million standard 20-foot containers in the first six months of 2007, 26 percent more than a year earlier. Sales rose 24 percent to 17.38 billion yuan, of which 31 percent came from Asia-Europe shipments.

"The company has better results than its peers because of more exposure to Asia-Europe trade and better cost controls," said Karen Chan of Credit Suisse Group in Hong Kong. "The strong profit growth is also due to a low base, as China Shipping was barely profitable a year earlier."

China Shipping's cost per container fell 7 percent in the first half from a year earlier, as it used larger vessels and paid less for fuel because of a fall in prices, it said. Sales on Asia-Europe routes rose 31 percent to 5.39 billion yuan in the first half. On Pacific sea lanes, sales climbed 6.4 percent to 6.8 billion yuan.

"China Shipping's performance will be even better in the second half," said Chan, who forecast a full-year profit of 1.84 billion yuan before the earnings announcement.

Container-shipping rates may climb 2 percent next year followed by a 5 percent rise in 2009, according to a Credit Suisse estimate.