China Cosco Shares Decline After Warning of First-Half Loss

China Cosco Holdings Co., the nation’s biggest shipping company, dropped the most in almost a month in Hong Kong trading after saying it expects to post a first-half loss.

The shares fell as much as 3.6 percent, heading for the biggest drop since July 3. It traded 2.4 percent down at HK$3.27 as of 11:30 a.m. The city’s Hang Seng Index gained 0.2 percent.

The net loss in the six months to June will probably narrow by as much as 85 percent from 4.87 billion yuan ($794 million) a year earlier, helped by one-off gains from asset sales, the company said in an exchange filing yesterday. China Cosco, unprofitable in the past two years, faces slowing demand for hauling commodities amid China’s economic slowdown and depressed freight rates caused by a glut of vessels.

“Shipping industry fundamentals remain challenging and we don’t see an industry recovery in second half based on the current supply and demand outlook,” Citigroup Inc. analysts led by Vivian Tao wrote in a note yesterday. “As such, we don’t believe China Cosco will be able to turn profitable operationally in second half.”

China Cosco, based in Tianjin, is restructuring assets in a bid to return to profitability as a third straight annual loss may result in shares being delisted at the stock exchange in Shanghai. The company may gain 3 billion yuan from earlier disposals of its logistics unit and a stake in a container maker and may sell more assets, according to Tao.

China Cosco didn’t say when it will report interim results.

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