31 March (Lloyd's List) - CHINA Merchants Port Holdings has denied it is interested in buying a 20% stake held by its Singaporean rival PSA in Hong Kong-based Hutchison Ports.
“We have not contacted the Singapore side and we have held no talks with Hutchison,” Huang Xiufeng, chief executive of the port arm of state conglomerate China Merchants Group told a press conference. Any acquisitions must make commercial sense, he said.
Speculation about a sale has circulated since the end of the past year. Media reports this month suggest CMG and Cosco Shipping are among the potential bidders for the equity stake, which could be worth about $4bn.
Some believe that the Chinese state-owned groups will be motivated to strike a deal with PSA to expand its global presence, especially under Beijing’s Belt and Road push for infrastructure development.
PSA, owned by Singapore’s state investment firm Temasek Holdings, was said to be in early discussions with interested buyers.
The assets put up for sale would not on the face of it appear to be a good fit for China Merchants Port, deputy general manager Lu Yongxin told Lloyd’s List on the sidelines of the conference.
“This is just a minority stake, whereas we are more focused on controlling and managing the terminals,” he said. “So this project is probably more suitable for funds, instead of a listed company like us. Their funding costs are cheaper and their requirement for returns is lower.”
A person close to the Chinese port giant also flagged up the geopolitical risks involved in the deal.
The crown jewels in Hutchison Ports’ portfolio and include Felixstowe, Britain’s biggest and busiest container port, and Hutchison Ports PPC manages and operates the ports of Balboa and Cristobal on the two sides of the Panama Canal, said the person.
“Do you think the UK and US will allow a Chinese company to have a stake in those facilities?" he asked.
“The Singapore-listed Hutchison Port Holdings Trust, which has a stronghold in Shenzhen and Hong Kong, is probably the most desired [sort of] assets for China Merchants, but the Li family will not let it go easily unless they want to quit the port business."
Hutchison Ports operates 51 units — 13 in Europe, 10 in China including Hong Kong, nine in the rest of Asia, nine in the Middle East and Africa, eight in Latin America and two in Australia. Most of them handle container cargo, with a few cruiseship terminals.
Mr Lu said his company would exercise caution when acquiring port assets for expansion given the backdrop of market conditions and the high interest-rate environment.
China Merchants Port saw its total container throughput across 42 ports edged up 1.1% year on year in 2022 to 135.5m teu, while net profits declined 4.5% to Yuan7.8bn ($1.1bn) on a 5.9% increase in revenue to Yuan12.5bn. Excluding one-off items, the profits, however, grew 7.7% to Yuan8.1bn.
The handling prospects for the company appear even more challenging this year, with a 5.7% fall in volume recorded in January-February.
Mr Huang said the volume had rebounded in March, although how sustainable the recovery will be remains to be seen.
