Wei Jiafu: COSCO low back

The crisis hit the shipping industry under the faucet

China COSCO whether there are investment value? People can not help but wonder, one would have been called the world's most profitable shipping companies is how to deal with huge losses? A three finalists in the world top 500 Chinese companies in the end a big or strong? However, placed in front marking the beginning of the real problem might be: COSCO Group, the layout of how the next 10 years? The globalization of multinational corporations in China how to get the road?

Through the global financial crisis, the baptism of the past year, China Ocean Shipping (Group) Corporation (hereinafter referred to as COSCO Group) has finally begun to move out haze.

In July 2009, "Fortune" Global 500 list published in Mainland China has 43 companies short-listed, the COSCO Group, ranked 327, compared with 78 last year to upgrade.

This allows COSCO President Wei Jiafu excited, "excellence," an interview that day, he made special mention of the day before the recently announced 500 rankings. For this ranking did not come easily.

Made the captain for eight years, in 1997, just after the Asian financial crisis, then in charge of COSCO, it has been ten years. Has experienced numerous waves of "CaptainW ei" (Wei captain) in the hundred-year financial crisis, he was still master COSCO wheel. But the rain Looking back, marking the beginning of still lingering fear: "No one country can be spared in the economic globalization, under the influence of large by the severe impact of the crisis, the COSCO Group are no exception."

First half of 2008, international shipping, or a blip, but in September, the U.S. sub-prime mortgage crisis began to spread to the real economy, international trade volatility, panic makes the international dry bulk freight index Composite (BDI) has plummeted, 2008 in December fell 663 points, in May 2005 compared with the historical high of 11793 points, or as high as 94.4%.

The authority of the international shipbuilding industry advisory body to the British Clarkson statistics show that in May this year, the world's shipbuilding orders to zero, setting the lowest level in at least 7 years; container business hit rock bottom, a serious shortage of capacity, freight rates fell sharply ... ...

In fact, the global shipping market late last year, the beginning all the way from the doldrums, the bad news pouring in: Ukraine's Industrial Carriers dry bulk carrier into a financial crisis since the outbreak of the first shipping company to declare bankruptcy, followed by the Swedish shipping company filed for bankruptcy Svithoid Tankers, Korean dry bulk operator Parkroad company goes bankrupt, Denmark, dry bulk cargo operator Atlas (Atlas) filed for bankruptcy, Singapore and dry bulk shipping company Armada to the court for bankruptcy protection, Nippon Yusen KK, Mitsui OSK and Kawasaki Kisen three major shipping companies the verge of bankruptcy ... ...

As China's largest international shipping, logistics and repair the leading shipbuilding company, the COSCO Group, the industry naturally can not be immune from the Great Depression.

The focus of much public concern, the COSCO Group's listed companies, China Ocean is also the first three quarters of 2008 the accumulated net profit of 19.712 billion yuan, has appeared in the fourth quarter, up 8.882 billion yuan of losses, a loss in the first quarter results announcement 3.351 billion yuan. "Such a loss, in this decade is the first time." Marking the beginning of that.

However, COSCO has escaped the disaster, The reason, the answer is: "foreseeability."

"CEO who was not wearing reading glasses to see distance, in front of the deputy to do something for others," marking the beginning of it very straightforward. Driving a boat, you can just reach of eyesight can be driving wheel, you will need to have radar, satellites and even to enhance the ability to foresee. As early as in 2007, the U.S. sub-prime mortgage crisis has just appeared, marking the beginning of the immediately formed a response team, and pro-headed, through research and analysis, they come to a conclusion: the sub-prime crisis could have seriously damaged the U.S. financial system, and then spread to global, and affect the real economy.

Then introduced six emergency response strategy, which is very important: In order to avoid the U.S. bank failures and financial losses resulting from the risk of strand breaks, COSCO immediately all bank debt in the United States to Chinese-funded banks, but also as far as possible deposits in foreign banks to Chinese banks, and cut unnecessary investment in order to ensure cash flow.

Nevertheless, faced with a hit by the global financial crisis, the industry, faced with a confidence index of the shipping market crash, investors have to ask: China COSCO (601919.SH) whether there is investment value?

People can not help but wonder, one would have been called the world's most profitable shipping companies is how to deal with huge losses? 1 three finalists in the world top 500 Chinese companies in the end a big or strong?

However, placed in front marking the beginning of the real problem might be: COSCO Group, the layout of how the next 10 years? The globalization of multinational corporations in China how to get the road?

Bottom, "the darkest moment is over"

In this round of rebound in dry bulk shipping business to become large sections of the performance of some of the most eye-catching.

In June of this year, the global orders for new ships back on the millions of tons; in July the world's new ship orders for more than 6.3 million dwt, for the first 6 months, 1.2 times the amount of all orders. By Wei Jiafu own words: "the darkest hour has passed."

Behalf of the international dry bulk shipping market trends barometer of the BDI was once climbed to 4,000 points. As a dry bulk transport market derivatives - FFA (Forward Freight Agreement) is rising gradually. According to the Baltic Shipping Exchange statistics, early in June FFA turnover of 4.8 million contracts, compared to 2.2 million contracts in early amplification doubled.

In the domestic capital market, shipping stocks have bottomed. China Ocean as "the only platform to build the capital of COSCO," sought after by investors. Only in July, China COSCO shares rose 36.33% on, and early in January than it is up more than 150%.

Changjiang Securities analyst Wu Yunying Transportation believes that with the economic recovery in 2010 is expected gradual improvement in demand for maritime transport industry will bring economic recovery, in which BDI in the second half will be maintained at a high 3,000 points or more shocks.

But for the container industry, the industry generally pessimistic expectations for the future situation. Container shipping mainly reflects Europe and the United States and other developed countries on the production of finished consumer demand, since 2005, actually has been in a low run. Judging from the current point of view, Europe and the United States needs is still a state of contraction, freight slump.

Dry bulk shipping more a reflection of developing countries (especially China) on iron ore, coal and other bulk commodities demand. A rebound in this round, because of China's steel demand to rise again, generating a rapid rise, driven by rising demand for coal, dry bulk shipping business to become large sections of the performance of some of the most eye-catching.

A few years ago in order to alleviate the shortage situation, the various shipping companies have shipbuilding, but has not yet been put into use, but now it faces capacity shortage. In 2007, the global shipbuilding industry, accounting for the existing fleet orders in hand, the proportion of capacity, about 58% bulk carriers, oil tankers of about 40%, the container is about 47%.

The past six months or so since the owners have to cancel the order, as early as early 2008, marking the beginning of the company will be two of the 126 reported to reject such a new shipbuilding program, in which three-quarters of dry bulk cargo ships, oil tankers and container quarter船.

Moreover, ship-breaking operations in the Great Depression in this unusual prosperity, in the first 5 months dismantling the global bulk carrier ship-breaking volume is the year 2008 the number of 2.5 times.

Authority of the Maritime Advisory Body Clarkson released in June this year, projections indicate that supply exceeds demand in dry bulk market will continue to be one of the major outstanding issues. To the end of 2009, if there is no delays and withdrawals, he said, the global dry bulk effective capacity than the 2008 year on year increase of 15.5%, while in 2009 the year of dry bulk cargo transport demand growth will be lower than 5%.

In fact, in July of this year, a listed company of China Ocean issued a public notice, saying that the board also approved a subsidiary company to cancel the building of eight bulk carriers.

But the UBS "Global Maritime Outlook" report shows that dry bulk shipping market may be headed toward recession. The end of 2009 and dry bulk carrier ship, than the current book value has shrunk 40 percent, as the world's largest dry bulk shipping company, China Ocean in 2009 increased the performance of the lack of space.

Investment bank Morgan Stanley's rating on the Chinese ocean-going maintenance of reduction, despite their long-term view of the shipping industry, a positive, but the judge Baltic Index the next 6 months, have the opportunity to decline.

For the future and China's ocean shipping market movements, investment between the lines also appeared some differences. July 15, Deutsche Bank holdings of more than 100 million shares to holders of H shares of China COSCO ratio to 5%; July 17, UBS lighten up, sold more than 750 million H shares of China COSCO.

Marking the beginning of the "excellence," told reporters that the group's performance in the second half will be better than the first half, but the overall situation is still not optimistic. Its listed companies, China Ocean July 29 issued a public notice is expected in the first half attributable net profit of shareholders of listed companies will be showing a loss. In the global economic downturn under the impact of global economic growth into a recession, materially affected by the international shipping market, the container fleet is operating at a big loss, dry bulk market was picking up, but there is still a loss of dry bulk fleet operations.

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