SHANGHAI International Port (Group) Co plans to issue up to three billion yuan (US$396.7 million) of convertible bonds to fund expansion, operator of China's busiest port said yesterday.
The three-year bonds will carry call warrants which will give investors rights to buy the company's new shares, it said in a statement filed to the Shanghai Stock Exchange yesterday.
Proceeds will be used to finance two port expansion projects, SIPG said.
The company said it hasn't nailed down the timing of the bond sale.
Shareholders will meet on September 12 to vote on the proposed sale, the company said.
Meanwhile, SIPG said it made a net profit of 1.8 billion yuan, or 0.087 yuan per share, in the first half of the year, without giving figures comparing it to the previous year.
That was because the the firm was newly listed in October last year. It had set a full-year earnings target of 3.3 billion yuan.
First-half sales totaled 7.6 billion yuan.
"That's a bit better than our expectation. We think it's no problem for SIPG to fulfill its whole-year target; it can also possibly beat the target," said Guosen Securities Co transport and logistics analyst Tang Jianhua.
More berths
SIPG has been building more berths to increase handling capacity to meet rising demand. Total cargo volume rose 20.3 percent to 173 million tons during the reporting period. Container traffic was up 24.2 percent, it reported.
Tang of Guosen said the valuation of shares in SIPG is a bit too high. They trade at 56 times this year's expected earnings and 49 times that of next year.
But given the fact that "the demand for container traffic in Shanghai is huge while the port handling capacity is not enough, there's still room for upward growth," Tang said.
A Tebon Securities Co research report also said the port operator sector is facing short-term pressure of high valuation after recent fast growth.
SIPG shares rose as much as 10 percent yesterday before closing 1.09 percent higher at 10.21 yuan.
They had been suspended from trading since last Wednesday.