Investor
Relations
Corporate Information
COSCO SHIPPING International (Singapore) Co., Ltd. (“COSCO SHIPPING” or the “Company” and together with its subsidiaries, the “Group”) aims to become the best-integrated logistics service provider in South and Southeast Asia. The Company is also involved in dry bulk shipping, ship repair and marine engineering, as well as property management.
Chairman and President's Statement
Dear Shareholders,
I am delighted to take this opportunity to offer you an overview of our company's performance throughout the fiscal year 2023. Despite encountering various global challenges, I am happy to report on our progress and our outlook going forward. In 2023, the global economy has not fully emerged from the shadow cast by the COVID-19 pandemic. The conflict between Russia and Ukraine persists, while armed clashes have reignited between Israel and Palestine in the Middle East. Meanwhile, inflation and bank interest rates remain high, contributing to a continued slowdown in global economic growth. According to the IMF report released in January 2024, the global economy grew at a rate of 3.1% in 2023, lower than the 3.5% in 2022.
Last year, Singapore's economic growth also slowed down. According to statistics from Singapore's Ministry of Trade and Industry ("MTI"), Singapore's economic growth rate was 1.2% in 2023, lower than the 3.6% growth rate in 2022. In 2023, the wholesale and retail trade, transport, and warehousing industries in Singapore grew by 1.1%, also lower than the 3.6% in 2022.
During the same period, the Group achieved a turnover of S$178.7 million, a decrease of 4% compared to 2022. Out of the total turnover, the revenue from comprehensive logistics business was S$148.2 million, accounting for 83%; revenue from ship repair, inspection, supply, and steel fabrication business was S$18 million, accounting for 10%; property management revenue was S$12.5 million, accounting for 7%. Despite our concerted efforts, the net profit attributable to shareholders of the Group in 2023 was S$1.9 million. Excluding the one-time impairment of goodwill in 2022, there was a year-on-year decline in net profit attributable to shareholders in 2023. The main reasons were the decline in income from The Grandstand commercial center, significant increases in bank interest, and lower contribution from associated companies. It is important to highlight that our team diligently worked towards achieving positive outcomes. Despite our unwavering commitment and best endeavors, we faced challenges that impacted our results. However, we remain steadfast in our dedication to addressing these challenges and improving our performance moving forward.
Business Operations
According to statistics from Singapore's MTI, the growth rate of the wholesale & retail trade and transportation & storage industries in Singapore was only 1.1% in 2023 due to the slowdown in economic growth. At the same time, the decline in international container market volume had a negative impact on local import and export container volume in Singapore compared to 2022. The decline in market container volume negatively affected the Company's container transport, depot, and warehousing business. In 2023, due to high bank interest rates, the Company's finance expenses increased significantly. In addition, due to high inflation, the Company's utility, and fuel costs also saw significant increases. Facing these challenges, the Company sought ways to increase revenue, reduce costs, and strive to maintain stable production and operations.
Cogent Holdings strengthened its marketing efforts and secured over 150 new clients throughout the year. Notably, these efforts bore fruit with the addition of esteemed partners such as Maersk, CMA, JNC Line, and Suttons, while also seeking to reduce costs. Such accomplishments underscore our unwavering commitment and tireless dedication to boost our operations. The Company established a Cost Audit Committee to analyze major expenditure items such as vehicle maintenance, insurance, fuel, water, electricity, and interest rates, and also saved on manpower costs through departmental integration and adjustment of human resource allocation. Additionally, the Company strengthened its digital supply chain construction, continued to promote digital transformation, actively promoted end-to-end digital products, and expanded its services.
In 2023, as Chinese shipyards gradually resumed normal production, there was a decline in the overall volume of ship repair, inspection, and supply activities in Singapore and the Southeast Asian region. Consequently, the marine engineering ship service business also experienced some level of impact. COSCO SHIPPING Marine Engineering (Singapore) Pte. Ltd ("CSME") overcame difficulties and persisted in providing customers with high-quality repair, inspection, and supply services. Amidst the resurgence in the marine market, CSME capitalized on the opportunity with unwavering determination and resilience. Consequently, CSME not only navigated through challenging times but also experienced growth in steel fabrication construction orders, surpassing those of 2022.
In terms of property management, The Grandstand commercial center ceased operations at the end of 2023, and the land was returned to the government. In line with market changes, Harrington Property raised rents when renewing leases with its tenants, thereby resulting in an increase in revenue.
In 2023, several of the Company's joint ventures had contributed to the Group's profits. Among them was COSCO SHIPPING Bulk (Southeast Asia) Pte. Ltd. which overcame difficulties in the declining bulk cargo market, seized market highs with the help of major shareholders, entered into charter parties, made efforts to control ship operating costs, and achieved returns which exceeded the market average. PT Ocean Global Shipping Logistics actively expanded its market while strictly controlling its operating costs. The year saw a decrease in trailer and prime mover rental fees, self-owned vehicle costs, and expenses for machinery equipment maintenance and spare parts procurement, resulting in good returns.
Key Accomplishments in 2023
Establishment of Goldlead Supply Chain Development (Southeast Asia) Pte. Ltd. ("Goldlead")
In March 2023, the Group and its related enterprise Supply Fortune Limited signed a joint venture agreement to establish Goldlead. After the establishment of the joint venture company, the Group was able to leverage on the available resources of COSCO SHIPPING Holdings Co Ltd to expand its supply chain business in Southeast Asia and increase end-to-end services in the region. Goldlead undertakes specific work in investing and operating platforms for digital supply chain business in Southeast Asia. To facilitate the further development of Goldlead, both shareholders are negotiating to increase their investments to enable Goldlead to invest and operate more digital supply chain infrastructure and facilities in the future.
Acquisition of Golden Logistics & Storage Sdn. Bhd ("Golden Logistics")
Golden Logistics, a Malaysian company, is a subsidiary of COSCO SHIPPING (South East Asia) Pte Ltd. Golden Logistics is mainly engaged in ship agency, freight forwarding and logistics business. In December 2023, SH Cogent Logistics Pte Ltd, the Company's subsidiary signed an agreement with COSCO SHIPPING (South East Asia) Pte Ltd to acquire 100% equity of Golden Logistics. The acquisition promotes further integration of Cogent's business in Malaysia, improves operational efficiency, and provides customers with a wider range of comprehensive logistics services.
Jurong Island Logistics Hub Phase 2 ("JILH II")
In respect of the JILH II, the Company has recently completed its feasibility study report and risk assessment report of the project and is in continuous communication with relevant parties, shareholders, and the Singapore government departments. Once the relevant approval procedures are completed, the project will commence construction.
The Grandstand Commercial Center
At the end of 2023, the Company ceased operation of The Grandstand commercial center and the land was returned to the relevant government authority. Cogent Automotive Logistics Pte Ltd continues to conduct automobile sales and storage operations at other locations and will also conduct online automobile showroom operations through the SuperApp digital platform.
Establishment of Strategic and Sustainable Development Committee
In 2023, the Singapore government departments attached greater importance to sustainable development work and raised higher requirements for sustainable development reports of listed companies. In order to effectively carry out various sustainable development tasks of the Company, the Strategic Development Committee under the Company's board of directors was reorganized and established as the Strategic and Sustainable Development Committee in October 2023, to better plan and guide various sustainable development tasks of the Company at the board level. In addition, the Company also established a sustainable development working group responsible for specific sustainable development tasks of the Company.
Change of Independent Directors
In early 2023, the Singapore Exchange Limited ("SGX") revised the listing manual, stipulating that the term of office of independent directors of listed companies cannot exceed 9 years. At that time, the tenure of the then three independent directors of the Company, Dr Wang Kai Yuen, Mr Er Kwong Wah and Mr Ang Swee Tian, had exceeded 9 years. In accordance with the requirements of the SGX, the Company completed the change of independent directors in 2023. The then independent directors Dr Wang Kai Yuen, Mr Er Kwong Wah and Mr Ang Swee Tian resigned as directors, and Mr Lim Lee Meng, Dr Chen Seow Phun, John and Mr Hoon Tai Meng were appointed as independent directors of the Company.
Future Economic Outlook
According to the IMF's World Economic Outlook released in January 2024, global economic growth in 2024 is expected to be 3.1%, unchanged from 2023, mainly because the economies of the United States and some developing countries are more resilient, and China is implementing policies to support economic recovery. This year, the pace of global inflation is expected to decline faster than expected. According to forecasts by the MTI, Singapore's economic growth rate in 2024 is expected to be in the range of 1% to 3%.
Future Development Direction and Business Outlook
The Company's future development goal is to become an outstanding comprehensive logistics and supply chain service enterprise in Southeast Asia. The Company will continue to strengthen management, continuously improve customer service levels, and gradually expand its market share in Singapore, Malaysia, and other Southeast Asian regions.
In 2024, the Company will focus on advancing the JILH II. The project covers an area of 25,000 square meters, with a construction area of no less than 62,500 square meters. Plans include the construction of general warehouses, hazardous goods warehouses, heavy container depots, sky depot, trailer and prime mover parking lots, and other logistics infrastructure. After the completion of JILH II, the Company's comprehensive logistics service capabilities will be greatly enhanced, helping the Company to gain a larger market share in the Singapore logistics market. At the same time, the Company is also negotiating with partners to establish joint ventures to continue to expand container repair services. The Company will continue to expand cross-border transportation business between Singapore and Malaysia and promote the digital transformation of automobile logistics.
In the future, the logistics supply chain business will focus on advancing digitalization. Leading in digital transformation will be crucial for maintaining competitiveness and growing market share. In 2024, Goldlead will focus on the development of digital supply chain infrastructure and facilities in Southeast Asia, continue to research and promote the investment and construction of warehouses, depots, trailers and prime movers, and other logistics infrastructure and resources in Singapore, Malaysia, Thailand, Vietnam, and other regions, laying a foundation for the sustained and stable growth of logistics and supply chain business in these regions in the future.
In 2024, CSME will strengthen market development efforts, strive for more ship repair, inspection, and supply orders from COSCO SHIPPING's fleets and external shipowners through collaborative efforts. Our joint ventures, COSCO SHIPPING Bulk Southeast Asia Pte. Ltd., PT Ocean Global Shipping Logistics and SINOVNL, will continue to work hard to increase revenue, control costs, and continue to contribute to the Group.
Dear Shareholders, in 2024, the Company will continue to work hard, steadily advance the JILH II, promote digital supply chain construction and digital transformation, adhere to green energy conservation and carbon reduction, and strive to achieve better performance to create better returns for shareholders. On this occasion, on behalf of the Company's board of directors and management, I would like to thank all employees for their hard work over the past year and thank all shareholders and the community for their valuable support to the Company over the years.