Shipping conglomerate COSCO International Holdings posted a 300 percent increase in net profits to 2.5 billion yuan in 2007, thanks to a HK$1.9 billion gain from the spin-off of its property arm, Sino-Ocean Land Holdings.

Excluding one-off and revaluation gains from its investment properties, the company's underlying profits were HK$643 million, up 93 percent compared with 2006's HK$332 million.

Meanwhile, the company's turnover increased 24 percent to HK$2.3 billion. It will distribute a final dividend of HK$3.50 per share and a special dividend of HK$1.80 each.

The company's vice-chairman Liu Guoyuan said yesterday that the parent group, China COSCO Group, will further inject shipping business into COSCO International - China COSCO's only listed shipping arm.

"We are working together closely on the issue," Liu said. "We hope that related deals can be announced by the end of the year."

COSCO International spun off and listed Sino-Ocean Land in the third quarter of last year, and it currently holds a 20.8 percent stake in the property unit.

Liu said that the company has no intention of downsizing the holdings, even though the shares of Sino-Ocean Land performed sluggishly in recent months.

Liu said the shipping business will still be the main source of income for COSCO International this year, accounting for 90 percent of the total revenue.

The company has sold its interest in non-core investments, including its entire stakes in COSCO International Construction Ltd and Shanghai Kingswell Garden, as well as its 51 percent interest in Shenyang COSCO Yihe Garden.

The disposal is to optimize the company's capital structure so as to turn its focus to core businesses such as shipping services.

The company's shipping services saw a 26 percent increase in turnover from HK$1.6 billion in 2006 to HK$2 billion in 2007.

Although the global shipping industry is being dragged down by the US credit turmoil, the company believes its shipping segment will continue to be boosted by the strong growth of the mainland economy. It also actively seeks new investment opportunities to create synergy among its businesses.

The company's gross profit margin fell 1 percentage point to 24 percent last year. The company's managing director, Liang Yanfeng, attributed the drop to the rising cost of raw materials, but he stressed that the gross margin still stands at a reasonable level.

COSCO International's shares closed at HK$4.90 on Friday, up HK$0.38 or 8.4 percent.

(HK Edition 03/29/2008 page2)