Photo: Aries Consulting
CHU KONG SHIPPING Enterprises (Group) Co Ltd (HK: 560), the Pearl River Delta’s top waterborne transport play, enjoys three factors contributing to its growth: passenger ferries, port logistics and cargo transport.
Chu Kong Shipping also has three strategies helping the firm along with its expansion vision: a focus on core ops, new business ventures and parent asset injections, a company official told investors at the Aries Consulting-sponsored “Braving the Waves: China Investment Strategies 2013” conference last week.
The Hong Kong-listed ferry and terminal play must be riding the right waves of late as its share price surged nearly 44% between December 4 and January 10.
Chu Kong’s market position in the passenger ferry business shuttling people back and forth between Hong Kong Island, Kowloon, Macau and several locations along Guangdong Province’s coast is so dominant that some of the terminals Chu Kong Shipping serves are simply known eponymously by the Hong Kong-listco’s name.
“The passenger traffic business is principally a monopoly, while the cargo business has room for further growth,” said CFO Mr. Yao Xiaohua.
Speaking at last week’s investment conference in Shenzhen featuring China, Hong Kong and Singapore-listed firms, Mr. Yao said the firm has been aggressively expanding its reach in existing stronghold sectors as well as extending out into new areas to bring additional revenue to the firm and value to shareholders.
“In July, our wholly-owned subsidiary -- Chu Kong High-Speed Ferry -- signed with Sands China unit Cotai Ferry to manage and operate the high speed ferry fleet of Cotai Ferry.
“This new business marks a milestone for CKS, as its experience in operating the high-speed ferry fleet has gained international vessel owners' recognition.”
In addition, CKS also struck a cooperate deal in November of last year with One Media (HK) Ltd to exploit the growing passenger ferry advertising business in the prosperous and heavily populated Pearl River Delta.
CKS and One Media will jointly establish a new company -- Chu Kong Culture Media Company Ltd (CKCM) -- in which Chu Kong Passenger Transport will hold 60% equity interest and One Media will hold the remaining 40%, bringing new growth areas for the group.
“Our parent company -- Chu Kong Shipping Enterprises (Hldgs) Co Ltd (CKSE) -- will also seek new business opportunities for CKS by means of acquisitions, business referrals and/or asset injections,” Mr. Yao added.
As proof of parent CKSE’s commitment to its Hong Kong-listed unit, CKSE last week increased its shareholding in CKSG via the secondary market by 5.208 million shares, raising its equity stake in CKSG to 71.61% from 71.03% previously.
CKSE said it intended to increase its shareholding in CKSG by acquiring shares from the secondary market over the next 12 months.
Passenger ferry performance has outperformed other business operations of late.
For the six months ended June 2012, CKS’s operating revenue rose 4.5% to 686 million hkd.
Passenger ferry operational profit rose an impressive 35.4% in the first half, with segment profit up 31.3% at 36.1 million hkd, while the gross margin increased by 0.7 percentage point to 24.0%.
Chu Kong Shipping is the dominant player in the Pearl River Delta.
In 2011 the Group had a port cargo handling market share of 22% and an unassailable 91% market share for passenger ferry services as well as enjoying a 15% share in the PRD’s container handling market.
CKSE was established in 1962. The company's strategic orientation is based on Hong Kong, backing on the mainland and facing the world. The main business of CKSE includes shipping operations between Hong Kong and the Pearl River Delta (PRD), high-speed water passenger transport and passenger ship trading and repair. It is also involved in sales and supply of oil and duty-free goods; investment and management of highway infrastructure; real estate development, tourism, marine advising, etc.
In September 1996, CKSD was established by CKSE to take over its cargo transportation business, including shipping agency, river cargo direct shipments and transshipments, wharf cargo handling (including mid-stream operations), cargo consolidation and godown storage as well as container hauling and trucking in Hong Kong.
Chu Kong Shipping Enterprises (Group) Co Ltd (CKS) is the largest waterway transportation services provider in the Pearl River Delta (PRD). Its businesses cover 1) agency services for ferry tickets of “Chu Kong Passenger Transportation”; 2) operation and ownership of over 30 inland cargo port terminals in PRD; 3) operation of cargo routes between Guangdong Province and Hong Kong; 4) management of Guangzhou Nansha Logistics Park; 5) management of CotaiJet high-speed ferry routes running between Hong Kong and Macao.
Cargo business includes various river trade cargo direct shipment and transshipment; container transportation, handling, repair and port logistics. It also offers passenger agency services for passenger carriers, with service to 10 major cities in PRD.
See also:
CHU KONG SHIPPING Parent Boosts Stake; Target Price Hiked
CHU KONG, ONE MEDIA Ink Strategic 20 Mln Hkd Ad Tieup
CHU KONG SHIPPING: Strong Interim Sales Despite Choppy Waters
