Container shipper Wan Hai Lines Ltd (萬海航運) yesterday said it is looking to Vietnam for growth potential, as the US-China trade dispute casts a cloud over the shipping industry.
“We cannot be too optimistic about our profit growth this year, as it is difficult to forecast demand for freight transport in light of the uncertainty arising from the trade war,” Wan Hai president Tommy Hsieh (謝福隆) told reporters on the sidelines of a shareholders’ conference in Taipei.
With US President Donald Trump and Chinese President Xi Jinping (習近平) likely to meet at the G20 summit in Japan at the end of this month, the situation might unravel, Hsieh said.
While some of the shipper’s peers earlier this year said that the trade tension might boost freight volume for the intra-Asia region, he disagreed, saying that the volume has stayed flat from a year earlier.
“As most Asian countries are manufacturing countries, they need to export their goods to end markets outside Asia. It is not easy for them to find new markets or change their supply chain so soon,” Hsieh said.
Most of Wan Hai’s clients still demand the shipper to operate on the same routes, he added.
However, the company’s Vietnam freight volume has risen more than other countries, as Vietnam, ranked second among all Asian countries in exports to the US last year, has seen its exports to the US jump this year, he said.
“Vietnam is the country most shipping companies are paying attention to, but we have our competitive strengths, as we have been operating some routes to this nation for a long time,” Wan Hai spokeswoman Laura Su (蘇麗梅) said.
Backed by client demand, Wan Hai in April started operating two direct routes from Vietnam to western US, with one from Haiphong and the other from Ho Chi Minh, Su said, adding that both lines have reduced transportation time to the US.
Wan Hai earlier this year invested in a port in Da Nang in central Vietnam, which should be helpful to its business there, Hsieh said.
Overall, this year could be better than last year if the trade tension eases and crude oil prices remain stable, he said.
Shareholders approved a proposal to distribute a cash dividend of NT$0.6 per common share, representing a payout ratio of 120 percent based on the company’s earnings per share of NT$0.5 for last year.
Wan Hai plans to issue NT$4.8 billion of unsecured corporate bonds in two tranches via an auction this month to fund its purchase of 20 container vessels and repay bank loans, the company said.
The company plans to sell NT$1.5 billion in three-year bonds and NT$3.3 billion in five-year bonds, with coupon rates of 0.95 percent and 1.05 percent respectively, it said in a filing with the Taiwan Stock Exchange.
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