Cosco Pacific to build container terminal in Nansha port

Cosco Pacific Ltd said on Monday it has agreed to form a joint venture with a total investment of 4 billion yuan (US $483 million) to build and operate a container terminal in the port of Nansha in China's southern Guangdong province. Cosco Pacific will hold 56 percent in the venture and Chinese partner Guangzhou Port Container Comprehensive Development Co Ltd will take up 44 percent, it said in a statement.
The deal will provide Cosco with its first majority-owned port asset in the Pearl River Delta region, Goldman said.
Cosco Pacific is the Hong Kong-listed container leasing and shipping terminal arm of China's largest shipping conglomerate, Cosco Group.
It said the registered capital of the venture, which will own and operate a proposed container terminal at Nansha port Phase II comprising six berths, will be 1.40 billion yuan.
The difference between the total investment amount and the registered capital will be met by bank borrowings, it added.
Analysts said the Nansha port Phase II will be operational in 2006 with an annual handling capacity of about 4.2 million twenty-foot-equivalent units (TEU).
"Pricing is fair at 115 yuan per TEU versus China's average of 200 yuan per TEU given Nansha's higher execution risk as a greenfield project," Deutsche Bank said.
The investment bank raised its target price for Cosco Pacific shares by about 13 percent to HK$19.35 after the deal. Cosco Pacific shares ended at HK$17.05 on Friday and have gained more than 30 percent in the past six months.
Last month, Cosco Pacific sold its 17.5 percent stake in Shenzhen's Shekou Container Terminals Ltd to Beijing-backed port operator China Merchants Holdings (International) Co Ltd as part of a plan to focus its terminal development strategy in the Pearl River Delta on Nansha port. Cosco Pacific terminals mainly located in China's three main container port regions, including the Pearl River Delta, Yangtze River Delta and the Bohai Rim, posted a 19 percent throughput rise to a total of 5.79 million TEUs in the first quarter from the previous year.