UPDATE 1-China COSCO 2007 net up; to pay $2.3 bln for ships

(Adds details and analyst comments)

HONG KONG, April 23 (Reuters) - China COSCO Holdings Co Ltd (1919.HK), the listed flagship of the country's top shipping conglomerate, said on Wednesday its 2007 earnings more than doubled, buoyed by a strong contribution from its dry bulk cargo fleet.

China COSCO (601919.SS) said late on Tuesday it plans to further expand its fleet by ordering $2.3 billion worth of new ships, including eight container ships of 13,350 20-foot-equivalent units (TEU) each and 17 dry bulk cargo ships.

The purchase of the parent's dry-bulk shipping business for nearly 34.61 billion yuan ($4.95 billion) late last year should also benefit the company in the midst a prolonged recovery in the container shipping industry this year, analysts said.

The company, which also operates the world's No. 5 container fleet, posted net profit of 19.5 billion yuan in 2007, up 135 percent from 8.3 billion yuan in 2006 on a proforma basis.

The results beat the company's December guidance of not less than 18.26 billion yuan.

"The results are better than the market expected, but its profit margins for container shipping declined, probably due to high costs, and the company now highly relies on its dry bulk operation," said Geoffrey Cheng, an analyst at Daiwa Institute of Research.

Dry bulk shipping accounted for more than 80 percent of the company's total operating profits in 2007.

Shares of China COSCO rose 3.37 percent on Wednesday but have lost 4.4 percent this year after nearly quadrupling last year on its A-share issue and asset-injection plan.

Analysts are mostly optimistic about dry bulk shipping after the London-based Baltic Exchange's Index .BADI, which monitors major trade routes for coal, iron ore and soft commodities like grains and sugar, recovered from a sharp correction in January.

"The bulk-shipping market should remain strong for 2008, and its management said it had covered more than half of its vessel days for 2008 at favourable rates at the end of last year," Chang said.

China's sizzling demand for energy and raw materials helped push global freight rates for bulk cargo ships to records in the fourth quarter of 2007.

The Baltic .BADI stood at 8,550 last Tuesday, 23 percent off the record of 11,039 hit last November but 52 percent above the low of 5,615 in January, when fears of increased supply of new ships and the cancellation of key iron ore shipments rattled the shipping market.

It's container shipping unit, which was hard hit in 2006 on high fuel costs, fears of oversupply and slowing global demand, improved last year on higher average freight rates and volume growth. (Reporting by Alison Leung; editing by Ken Wills)