Cosco to get out of property sector
Shipping group to sell interest in Sino-Ocean Land following Beijing’s order
Peggy Sito and Yvonne Liu
20 March 2010
China Ocean Shipping Group (Cosco) will dispose of its indirect holdings in mainland developer Sino-Ocean Land Holdings after Beijing ordered state-owned enterprises to get out of the real estate sector.
President and chief executive Wei Jiafu said yesterday the group would sell its indirect holding of about 8 per cent in Sino-Ocean Land within six months.
This is in line with the group’s policies to focus on its core business, Xinhua quoted Wei as saying.
Sino-Ocean Land is 16.9 per cent owned by Cosco International Holdings, in which Cosco has a 51 per cent stake.
On Thursday, the State-owned Assets Supervision and Administration Commission (Sasac) ordered 78 companies to concentrate on their core businesses and get out of the real estate market.
The move is seen as a reaction to mounting criticism that state-owned enterprises have bid up land prices to record highs since a property boom began last year. The order also named 16 major state-owned developers that were permitted to remain in the real estate sector.
Sino-Ocean Land’s shares fell 2.8 per cent to close at HK$7.03 yesterday because Cosco is not included in the list of 16 firms.
Sino-Ocean Land is one of the most aggressive property players.
It bought one of Beijing’s most expensive sites for 4.08 billion yuan (HK$4.64 billion) or an accommodation value of 24,070 yuan per square metre at an auction on Monday.
Adrian Sum Pui-ying, the chief financial officer at Sino-Ocean Land, yesterday said the company would not be affected by the order as it was not a state-owned developer.
“We have shareholders which have state-ownership. But our shareholders are diversified.
“None of them owns more than 25 per cent of our company,” Sum said.
In addition, since the company is listed, its operations and management are independent, he said.
At present, the biggest single shareholder in Sino-Ocean Land is China Life Insurance, which holds a 24.08 per cent stake.
Meanwhile, the stocks of other mainland developers turned in a mixed performance yesterday.
Shares in Cofco and Poly Real Estate, which are among the 16 companies whose primary business is property, closed up 5.68 per cent and 0.92 per cent respectively on the mainland stock exchanges.
China Overseas Land & Investment, a Hong Kong-listed unit of China State Construction Engineering, closed 0.36 per cent higher at HK$16.96.
Credit Suisse analyst Raymond Cheng said the Sasac order might help the consolidation of the property industry.
However, the overall impact was not significant because state-owned companies played a minor role in the property market as a whole.
Total property sales by state-owned enterprises amounted to 220.9 billion yuan last year, accounting for 5 per cent of the total sales of mainland developers.
Areas sold by state-owned companies were 28.07 million square metres, or 5 per cent of the total sold in the industry.
“The policy will only have a psychological impact on the land market,” Kaisa Group Holdings chairman Kwok Ying-shing said yesterday.
Cash-rich state-owned enterprises and private companies would continue to bid for land if prices were reasonable, he said.