Chuan Hup To Buy 20 New Barges & Tugs

Marine shipping company Chuan Hup Holdings expects a contract to ship coal to Indonesia to contribute to group earnings in 2001, the group's finance director, Lim Kwee Siah, said., Lim said the contract was worth an estimated S$300 million in revenue spread over 15 years, or S$20 million a year. "Conservatively, I expect the contract to contribute to group earnings in financial year 2001," Lim said. Talk of the contract had been driving Chuan Hup shares to successive new year highs in recent days. The shares rose to S$1.83 in early trading before easing to S$1.79, up two cents in mid-afternoon. "It is actually an old contract that had been signed in 1995. But it should be starting soon," Lim said. Chuan Hup had signed the contract with an Indonesian party, PT Adaro, to ship coal from Indonesia's Kalimantan to a power station in East Java. Lim said Adaro had to supply the coal to the power station that had just been completed and was undergoing some test runs. The shipping of coal from the Kalimantan side would be by river and Chuan Hup had to ship about four million tons of coal a year, he said. Lim said the contract with Adaro, already an existing customer, would be one of the largest for the group in terms of the duration and value of the contract. He said Chuan Hup, which had a fleet of about 145 barges, tug boats and other vessels, would have to "put in some more vessels" for the latest Adaro contract. The group would probably have to invest some S$40-S$50 million for 20 new barges and tug boats, he said. Financing of the vessels would probably come from the group's internal resources. Chuan Hup's cash pile at the end of its last financial year ended June 30, 1999 stood at S$70 million. "I do not foresee any need to raise money for the vessels," he said. Lim also said Chuan Hup, which more than doubled its profit to S$42 million in 1999, aimed to maintain its return on equity of 14 percent. "With a target ROE of 14 percent, we will continue to see growth as our capital base increases," he said. On the group's proposed one-for-five stock split, he said shareholders would be holding an extraordinary general meeting on November 19 to vote on the issue. - (Reuters)