Sinotrans eyes acquisitions in focus on dry bulk

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HONG KONG, Nov 26 (Reuters) - Sinotrans Shipping Ltd (0368.HK: Quote, Profile, Research, Stock Buzz), China's third-largest owner of dry bulk ships, will consider acquiring smaller rivals as well as buying new and second-hand ships as it expands its dry bulk cargo fleet, its chairman said.

Sinotrans, which raised US$1.47 billion in a recent IPO, plans to boost the profit contribution from dry bulk ships to more than 90 percent in two years from about 85 percent this year, Chairman Zhao Huxiang said in a briefing on Friday. His comments were embargoed for release on Monday.

"China has many small bulk carrier operators with just several ships, and if opportunities arise we will consider taking them over," Zhao said.

He would not comment on market speculation that Sinotrans might take over its sister company, China National Chartering Corp (Sinochart), to diversify into the dry bulk cargo carrier chartering and operating business.

Brushing aside the stock's 13 percent slide in a disappointing trading debut last Friday that was triggered by falling freight rates, Zhao said Sinotrans' profit margin would rise significantly in 2008 as dry bulk freight rates have more than doubled this year despite a recent retreat.

Its stock recovered on Monday morning, slightly lagging the broader market, and was up 1.8 percent at HK$7.25 in mid-morning trade, compared with its initial public offering price of HK$8.18 each.

Zhao said most of the company's contracts will be renewed this year and next. About 28 percent of Sinotrans' leasing contracts for dry bulk vessels will be renewed this year and 60 percent in 2008.

Sinotrans' IPO sponsors, UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and BOC International, expect the firm's net profit to grow 15 percent to $137 million this year, and more than double in 2008 to $298.5 million.