SembCorp Marine acquires 30 per cent equity stake in COSCO Shipyard Group to grow its marine business in China
The Board of Directors of SembCorp Marine is pleased to announce that it has signed an agreement with China Ocean Shipping Co. (COSCO) to acquire a 30 per cent equity stake in the enlarged capital of COSCO Shipyard Group Co. Ltd (CSG) to grow its marine business in China.
The COSCO Shipyard Group is a leading ship repair and conversion group in China . It owns five major shipyards that are strategically located in the key coastal cities stretching from Dalian in the north, Nantong, Shanghai and Zhoushan in the centre, to Guangzhou in the south. These shipyards provide ship owners with an effective network of marine engineering services across the entire length of China ’s coast. Three of the shipyards, Dalian, Nantong and Guangzhou are already among the top ten largest ship repair yards in China.
SembCorp Marine’s net consideration for the 30 per cent equity stake in COSCO Shipyard Group is RMB 240 million (S$49 million) based on the revalued Net Asset Value of the CSG and the share transfer of its 20 per cent equity stake in COSCO Dalian Shipyard to the enlarged COSCO Shipyard Group. This brings SembCorp Marine’s total investment value in CSG to RMB 340 million (S$70 million).
Final shareholdings of COSCO Shipyard Group are as follows:
China Ocean Shipping Co (Cosco)
SembCorp Marine Ltd
Shanghai Ocean Shipping Co
Guangzhou Ocean Shipping Co
Tianjin Ocean Shipping Co
The additional investment of S$49 million will be funded from SembCorp Marine’s own internal resources.
This investment in the enlarged COSCO Shipyard Group is in line with SembCorp Marine’s strategy to establish a China Hub to grow its ship repair and marine business in China . The China Hub would enable SembCorp Marine to establish its presence across China , in the northern, central and the southern part of China within the shortest period and in strategic points along the entire length of China ’s coast. China is one of the fastest growing maritime nations in the world. The Shanghai Port was ranked 3rd in the world with 11.28 million TEU recorded in 2003 as compared with 10.61 million TEU in 2002. Other growing ports include Shenzhen Port (10.61 million TEU in 2003) in the south, Qingdao and Tianjin ports in the north. In general, the growth in these ports will have a direct influence on the growth in the ship repair market which saw an annual growth of 13% for the last 3 years.
Mr Wong Kok Siew, Chairman of SembCorp Marine, affirmed that “Chinese shipyards are poised to play an active role in the growing ship-repair market in the Asia-Pacific. SembCorp Marine is committed to the China market, and our agreement with COSCO will form a significant step in the group’s overall plans to position itself in China.”
The move builds on the already-successful partnership between SembCorp Marine and COSCO. Speaking of the alliance, SembCorp Marine President and CEO Mr Tan Kwi Kin said “COSCO is one of the top shipping companies in the world. We are honoured to partner COSCO. Together, we will build a strong China Hub, benefiting all partners. We will also jointly seek investment opportunities in strategic locations outside China.”
Captain Wei Jiafu, President and CEO of COSCO said “We are pleased with our partnership with SembCorp Marine. Both COSCO and SembCorp Marine have their strengths and the partnership will be a win-win situation for both of us. SembCorp Marine’s expertise in offshore work will facilitate COSCO Shipyard Group’s participation in this growth market.”
The investment is subject to final approval from the Central Authority of the People’s Republic of China and is not expected to have a material impact on SembCorp Marine’s earnings per share and net tangible asset per share for the current financial year.
About SembCorp Marine
SembCorp Marine, the marine engineering arm of SembCorp Industries, is a leading global marine engineering group. It has a combined docking capacity of 2.8 million dwt and offers the largest marine facilities east of the Suez Canal.
Serving customers globally, SembCorp Marine delivers a full spectrum of integrated ship repair, shipbuilding, ship conversion, rig building and offshore engineering solutions through a network of eleven strategically located shipyards in three strategic hubs of Singapore , China and Brazil.
Working in synergy, these shipyards integrate their experience and expertise to provide integrated customised solutions through complementary facilities and capabilities from conceptualisation and design through to commissioning and delivery.
About China Ocean Shipping Co
China Ocean Shipping Co. (COSCO), founded in 1961, is a diversified service company with one of the most recognised and admired brand name in the world focusing mainly on shipping and modern logistics businesses. The group also serves as an independent ship agency and provides services in freight forwarding, shipbuilding, shiprepairing, terminal operation, container manufacturing, trade, financing, real estate, IT and contract employment.
About COSCO Shipyard Group
COSCO Shipyard Group is a leading group in China specialising in ship repair and conversion. It has 5 ship repair yards that are strategically located along China ’s most important coast line. Formerly known as Nantong Zhong Yuan Shipyard, CSG was established in 1988 and comprises Nantong, Dalian, Shanghai, Zhoushan and Guangzhou. In 2001, the company went through a major restructuring and was renamed COSCO Shipyard Group Co. Ltd. Since 2001, CSG’s revenue has grown 45 per cent from RMB 1.1 billion to RMB 1.6 billion in 2003. CSG’s Nantong, Dalian and Guangzhou shipyards ranked among the top 10 ship repair yards in China by sales turnover. In 2003, Nantong was ranked 1st followed by Dalian and Guangzhou was ranked 10th.
Brief details of the shipyards within the enlarged COSCO Shipyard Group are as follows:
Cosco ( Dalian) Shipyard
Cosco ( Dalian) Shipyard operates from a 35-hectare site located in Dalian, China ’s marine technology and industry hub in the Northeast. The shipyard has three docks with a total capacity of 340,000 dwt and 1,582 metres berthing quays. Its main activities include ship repair, including tankers, bulk carriers and container vessels, ship conversion and offshore engineering. Cosco ( Dalian) Shipyard has the potential to grow further and to be the centre of focus for the Cosco Shipyard Group in the north.
Cosco( Nantong) Shipyard
Cosco ( Nantong) Shipyard is the first shipyard of the Cosco Group. Located adjacent to the busy port of Nantong, one of the fastest growing coastal cities and within a short distance from Shanghai, Nantong Shipyard has 1,120 metres berthing quays and is equipped with one Cape size and one Panamax size floating dock with a total capacity of 230,000 dwt. With its advanced facilities, highly-trained technical personnel and experienced workforce, Cosco ( Nantong) handles approximately 150 vessels per year. The shipyard has consistently been ranked first amongst Chinese shipyards in terms of turnover and customer feedback. It has the potential to grow into a sizeable shipyard equivalent to a Singapore shipyard servicing medium to large-sized vessels.
Cosco ( Shanghai) Shipyard
Located in Shanghai, Cosco ( Shanghai) Shipyard is a newly affiliated company of the Cosco Shipyard Group. Prior to this, the shipyard has more than 30 years experience in repairing and servicing a wide variety of onshore and offshore engineering activities for the marine industry. Cosco ( Shanghai) Shipyard has a floating dock of 30,000 dwt capacity and 235 metres berthing quays. This shipyard complements and is integrated to Cosco ( Nantong) Shipyard in central China.
Cosco (Zhoushan) Shipyard
Located in Zhoushan, close to the international sea route and navigation hub clusters in Asia, Cosco (Zhoushan) Shipyard is a newly built shipyard with one drydock of 150,000 dwt capacity and 500 metres berthing quays. Its main activities include ship repair of tankers, bulk carriers and container vessels. Newly acquired by COSCO in the 1Q2004, Cosco (Zhoushan) Shipyard has the potential to grow into a mega shipyard equipped with multiple docks and capable of servicing all marine activities, including VLCC repairs and offshore fabrication. The shipyard is earmarked to take the lead for all Cosco shipyards located in central China.
Cosco ( Guangzhou) Shipyard
Cosco ( Guangzhou) Shipyard is the most flexible and aggressive shipyard in south China . Located in Guangzhou and a short distance away from Hong Kong, Cosco ( Guangzhou) Shipyard is equipped with one Panamax size 80,000 dwt floating dock and 405 metres berthing quays. The shipyard has established a good reputation with ship owners worldwide since joining the Cosco Shipyard Group. The shipyard will be the forerunner for a group of shipyards in the south of China.
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