Another 8 vessels in a 3 billion yuan mega-order! Central enterprises "team up" to build ships against the trend

CDB Leasing recently placed orders for 8 more 210,000 DWT bulk carriers at three state-owned shipyards, with a total value of approximately US$417.6 million (approximately RMB 2.948 billion). This is another major cooperation deal among central SOEs, following Bank of Communications Financial Leasing and China State Shipbuilding Corporation's Waigaoqiao Shipbuilding and Guangzhou Shipyard International signing an order for 12 120,000 DWT dual-fuel tankers on April 29. Facing the impact of the epidemic on the shipping market, central SOEs are 'banding together' to build ships against the trend.

Three state-owned shipyards receive orders for 8 210,000 DWT bulk carriers

On April 30, CDB Leasing issued an announcement that China Development Bank Financial Leasing Co., Ltd. (CDB Leasing) signed three construction contracts with Qingdao Beichuan Heavy Industry, Yangzhou COSCO Shipping Heavy Industry, and Waigaoqiao Shipbuilding, respectively.

Among them, Qingdao Beichuan Heavy Industry will build 2 210,000 DWT bulk carriers, priced at approximately US$104.4 million. CDB Leasing will pay Beichuan Heavy Industry in 5 installments based on the vessel construction progress. The first new vessel is scheduled for delivery in December 2021, and the second in March 2022.

Yangzhou COSCO Shipping Heavy Industry will build 3 210,000 DWT bulk carriers, priced at approximately US$156.6 million. CDB Leasing will pay Yangzhou COSCO Shipping Heavy Industry in 5 installments based on the vessel construction progress. The new vessels are scheduled for delivery in February 2022, March 2022, and April 2022, respectively.

Waigaoqiao Shipbuilding will build 3 210,000 DWT bulk carriers, priced at approximately US$156.6 million. CDB Leasing will pay Waigaoqiao Shipbuilding in 5 installments based on the vessel construction progress. The new vessels are scheduled for delivery in February 2022, March 2022, and April 2022, respectively.

CDB Leasing stated that the company plans to lease these bulk carriers to an independent third party under long-term time charter to earn rental income. Developing vessel operating lease business is an important method for the company to enrich its vessel business types and enhance its competitiveness in the vessel business market. Therefore, entering into shipbuilding contracts with the three shipyards is beneficial for increasing the company's operating lease business revenue and is consistent with the company's business development strategy.

Previously, it was reported that CDB Leasing would order 3 210,000 DWT bulk carriers each from Yangzhou COSCO Shipping Heavy Industry and Waigaoqiao Shipbuilding, to be leased to the German energy giant RWE Group for an 8-year term, with rent linked to an index. These 6 new vessels will be equipped with scrubbers and are scheduled for delivery in 2022.

Completed delivery of 26 operating lease vessels in 2019

China Development Bank Financial Leasing Co., Ltd. is the sole leasing business platform of China Development Bank. CDB Leasing began its vessel leasing business in 2008, making it one of the earliest leasing companies in China to engage in vessel leasing. In 2019, CDB Leasing's financial lease revenue from vessel leasing was RMB 869.7 million, a year-on-year increase of 22.2%. This was mainly due to increased investments in vessel business and a rise in the return on financial lease assets. In 2019, total business disbursements reached RMB 93.246 billion, of which vessel disbursements amounted to RMB 9.604 billion. As of December 31, 2019, the total assets of the Group's vessel leasing business were RMB 27.247 billion, a year-on-year increase of 25.9%. Revenue and other income from vessel leasing business amounted to RMB 1.9495 billion, a year-on-year increase of 76.0%.

As of December 31, 2019, the CDB Leasing Group managed a total of 86 vessels (with an additional 25 bulk carriers under construction), including 63 bulk carriers, 15 container ships, 4 oil tankers, 2 LNG carriers, and 2 dredgers.

CDB Financial stated that in 2019, the Group continued to pursue balanced development of financial leasing and operating leasing, focusing on technologically advanced, energy-efficient, environmentally friendly, and versatile vessels as leased assets. In its vessel operating business, it adhered to 3 major strategies:

1. Continuously advancing the key account strategy, developing new clients such as COFCO International, and further expanding cooperation with internationally leading quality clients in segmented markets like Cargill International, Mediterranean Shipping Company (MSC), Sumec, and Jiangsu Shagang Group;

2. Implementing measures such as setting minimum guaranteed rents and utilizing market tools to periodically lock in floating rents of some vessels to fixed rents, thereby enhancing the profitability of the company's vessel operating lease segment;

3. Successfully completing the delivery of 26 operating lease vessels throughout the year, all of which were bulk carriers; the operational and safety conditions of time-chartered vessels in operation were good, and cost control was effective: the operating rate of time-chartered vessels exceeded 99%, and all vessels' RIGHTSHIP* star ratings exceeded charter party requirements.