What is the positioning of COSCO SHIPPING International since the establishment of China COSCO Shipping Corporation Limited? What is the development strategy of the company?
COSCO SHIPPING International will accelerate the development of shipping services industrial cluster and non-financial business investment platform with the support of COSCO SHIPPING Group. In relation to the establishment of shipping services industrial cluster, the Company still strives to become a world class and the leading shipping services company in China. The Company will actively adhere to the development strategy of COSCO SHIPPING Group by striving for the consolidation and restructuring of shipping service assets under COSCO SHIPPING Group and seek external acquisition opportunities for shipping services business. Meanwhile, the Company will review its business structure and search for appropriate opportunities for adjustment, in order to strengthen the synergy effect, expand the scope of shipping service business, extend and improve the industrial chain of shipping services, and gradually build up the core competitiveness of shipping services industrial cluster. To confront with the contracting traditional business, we will shift our mindsets to integrate new technology into the existing business sector, actively look for and extend to new business areas with high added-values, so as to fully enhance the basis for earnings of each business unit.
As for the non-financial business investment platform, the Company will participate in the investment of COSCO SHIPPING Group in strategic and key development areas and strive to look for new business area. The Company will also pay attention to the investment opportunities arisen from new economy and new industries so as to bring actual benefits to the stakeholders as soon as possible and achieve the leapfrog development.
Will the shipping services under China Shipping Group be injected into COSCO SHIPPING International?
COSCO Group operated about 600 vessels. After the establishment of China COSCO Shipping Corporation Limited, it operates more than 1,100 vessels. The asset size and demand for shipping services from its fleet will be more than those within COSCO Group. This is a golden opportunity for COSCO SHIPPING International to achieve specialization and economy of scale, so as to increase its business volume and enhance profits.
Currently, COSCO SHIPPING International is making contact with the relevant parties operating the same or similar businesses inside China Shipping Group. The Company will make disclosure in due course.
What is COSCO SHIPPING International’s dividend policy? Will the Company raise its annual dividend payout ratio or pay special dividend in the future on the condition that the Company has plenty of cash and no progress has been made in the potential acquisition projects?
Since March 2015, the Board of the Company approved to increase its annual dividend payout ratio from no less than 25% to no less than 50% of net profit, prior to practical progress in major investment project in the future.
The Board will continue to follow this dividend policy in the future. In the meantime, the Board of COSCO SHIPPING International will make prudent decision after considering the factors including macro economy, the shipping services market and the fund needed for future development as a whole.
In case, after the Company publishes major transaction announcement in relation to investment project, the annual dividend payout ratio will maintain at the level of no less than 25% of net profit, subject to the results, availability of distributable reserves and cash flow of the Company at that time.
How does COSCO SHIPPING International manage its large amount of cash in hand? Does it acquire shares, bonds or other investment products? What would the currency and the interest rate be if the investment was in the form of bank deposits?
The Group, on the basis of balancing risk, return and liquidity, invested in a mixture of financial products, including overnight deposits, term deposits and offshore fixed deposits, so as to enhance the Group’s finance income and to ensure availability of cash at appropriate times to meet the Group’s commitments and needs. The Company also keeps intensifying its cash management and actively negotiates with various bankers to strive for a better deposit interest rate for its abundant liquid cash on hand.
During 2015, the interest income of COSCO SHIPPING International reached HK$115 million, decreased by HK$27.81 million as compared to the previous year. The Group achieved an annualized 1.86% return on the Group’s cash for the year (2014:2.3%), representing 125 basis points above 3-month US Dollar London Interbank Offered Rate as at the end of 2015.
Does the management of the Company have any share options?
The last share option scheme COSCO SHIPPING International expired at the end of 2014. In the future, COSCO Shipping International will actively study to push forward an effective incentive mechanism applicable to the Company’s own characteristics in accordance with the overall arrangement of China COSCO Shipping Corporation Limited, and will disclose in due course.