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Chelsea Logistics’ newly acquired vessels to hike earnings 10% by late 2017

Chelsea Logistics Holdings Corp’s (CLC) new vessel acquisitions are expected to increase fleet capacity by 10% and “should start to have meaningful contribution to earnings” as early as the last quarter of 2017.

In July 2017, CLC subsidiary, Trans-Asia Shipping Lines, Inc., acquired a 6,348 gross revenue tonnage (GRT) cargo vessel named MV Orient Spirit, CLC said in a statement. The vessel, which has a capacity of 400 twenty-foot equivalent units (TEUs), will be in operation by the first quarter of 2018, plying the Manila-Cebu-Manila route.

In November 2017, PNX-Chelsea Shipping Corp., a subsidiary of CLC’s Chelsea Shipping Corp. (CSC), acquired three vessels with a combined GRT of 15,811 and will serve the cargo transport requirements of the 2GO Group, of which CLC has shares in. The new vessels are now in commercial operation.

Fortis Tugs Corporation, also a subsidiary of CSC, recently acquired a 125 GRT Japanese-built tugboat, MT Fortis VI, to bolster its tugboat fleet used to maneuver tankers and other larger vessels. The tugboat will be operational by December and bring the total tugboat fleet of Fortis Tugs to nine.

“The newly acquired vessels will bring us another step closer to fulfilling our commitment to growth in order to realize more value for our stakeholders, from the investors to the consumers,” CLC chairman Dennis A. Uy said.

Recently, CLC acquired Starlite Ferries, Inc. (SFI), a roll-on, roll-off (Ro-Ro) and passenger ship operator in Batangas and other routes, to strengthen its position in the Southern Luzon (Batangas) to Northern Visayas (Calapan, Odiogan, Roxas) route. SFI owns and operates 14 vessels of various sizes, five of which were acquired brand-new from Japan. Combined with 2GO’s market share of 30%, the purchase expands CLC’s market share to 36% as of the third quarter of 2017.

“Shipping is a high-margin, high-return, capital-intensive business. What we are doing now is laying the foundation for a sustainable, cash-generative business by making these critical shipping investments in the form of acquisitions of vessels and/or companies. This is complemented by the logistics business, which we expect to have the biggest growth potential,” CLC chief executive officer Chryss Alfonsus V. Damuy said.

Also in November 2017, CLC completed its acquisition of Worklink Services Inc. (WSI), a one-stop integrated logistics solutions provider. By acquiring WSI, the CLC group creates synergy as WSI offers to the group its expertise in domestic forwarding and logistics services.

These acquisitions were bankrolled by the net proceeds from CLC’s initial public offering of common shares in August 2017 and will be fully consolidated in 2018.

“By modernizing and expanding our operations, we can provide better shipping and logistics solutions as well as make our country more competitive in capturing the increasing trade opportunities in the Philippines and in the Southeast Asia,” Damuy said.

“Therefore, CLC will continue to expand and modernize its fleet of vessels to position itself to capture these opportunities,” he added.

Uy’s Udenna Group ventured into shipping in 2006 through CSC to support the operations of Phoenix Petroleum Philippines, Inc. It has since grown the business into the country’s biggest logistics group with the largest tanker fleet in terms of capacity.

In March, CLC further expanded the group by acquiring a 28.15% indirect economic interest in 2GO.

Before acquiring these cargo vessels and tugboat, CLC’s fleet was comprised of 15 tankers, eight tugboats, 21 Ro-Ro and passenger vessels (RoPax), and four cargo ships. 2GO, meanwhile, has eight RoPax, eight cargo vessels, and 10 fastcraft.

“With its bigger fleet and all-around services, CLC could better serve the demand for quality logistics and shipping within and outside the Philippines and, at the same time, strengthen its synergies with other Udenna businesses,” Uy said.

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