(31st May 2010, Hong Kong) COSCO International Holdings Limited (“COSCO International” or “the Company”) (SEHK Stock Code: 00517) and its subsidiaries (“the Group”) are pleased to announce that its wholly-owned subsidiary, Yuantong Marine Service Co. Limited (“Yuantong”) expanded its supply of marine equipment and spare parts business to overseas through acquiring a company in Singapore and setting up a new company in Japan.

Yuantong entered into a share transfer agreement on 31st May 2010 to acquire 100% of the issued share capital of a company namely Xing Yuan (Singapore) Pte Ltd (“Xing Yuan”) to expand its supply of marine equipment and spare parts business in Singapore. The total consideration of the acquisition is S$850,000 (equivalent to approximately HK$4,814,655). Upon completion of the acquisition, the Company shall hold 100% of the issued share capital in Xing Yuan. Together with the incorporation of a new company named Shin Chung Lin Corporation (“Shin Chung Lin”) in Japan earlier, the Group will successfully set up new footholds in Singapore and Japan, which are the global shipping hub and one of the world largest marine equipment manufacturing countries respectively. Coupled with its existing business based in Hong Kong and China Mainland, COSCO International will successfully build up a complete platform of marine equipment and spare parts supply network in Asia Pacific region.

Mr. Wang Xiaodong, Managing Director of COSCO International, gave his remark on the acquisition, ‘As a growing company, we are always seeking opportunities to expand our shipping services value chain. After the global financial crisis, we have noted that the world shipping industry and shipbuilding industry have accelerated moving to Asia, especially China. However, the development of China’s shipbuilding support industry still lags behind shipbuilding industry and many marine equipment and spare parts are mainly imported from South Korea, Japan and Europe. We believe that expanding our geographical presence to overseas to form a global marine equipment supply network is one of the key development strategies to expand our supply of marine equipment and spare part business and further strengthen our core competitiveness in future.”

“Singapore is one of the major shipping hubs in the world with tremendous annual trade volume of marine equipment, while Japan owned nearly 700 marine equipment manufacturers and ranked the third largest marine equipment manufacturing countries following Europe and South Korea. The acquisition of Xing Yuan can enable us to leverage on its geographical advantage to develop material supplies business for all fleets in the world. The incorporation of Shin Chung Lin in Japan will facilitate the Group to establish good business relationship with those sophisticated marine equipment manufacturers in Japan and South Korea and help increase our product variety and business scale. In addition, these two companies will give us opportunities to closely provide more shipping related services and products for foreign ship owners and ship builders. This will help create synergies with other business units of the shipping services segment and further enhance its profitability in the future, so as to maximise our contribution to the shareholders.” Managing Director Wang Xiaodong added.

In this acquisition, Yuantong, a wholly-owned subsidiary of COSCO International, entered into a share transfer agreement with COSCO Holdings (Singapore) Pte Ltd(“COSCO Singapore”) and Hai Feng Marine (Private) Limited (“Hai Feng”) to acquire each of 60% and 40% of the issued share capital of Xing Yuan respectively. The consideration was determined with reference to the audited net assets value of Xing Yuan as at 31st December 2009 of S$1,867,713.72, which was adjusted and deducted by S$1,317,713.72 being the amount of dividends which the Vendors are entitled to be paid for the year ended 31st December 2009 with reference to the audited accounts of Xing Yuan for the year ended 31st December 2009 together with an addition of a premium of S$300,000. The consideration will be satisfied by way of internal resources of the Group. Xing Yuan is mainly engaged in the business of sales and installation of marine equipment and spare parts for vessels and related services including marine transportation and sales, exporting and importing of raw materials and products based in Singapore. During 2009, Xing Yuan’s profit before taxation amounted to S$1,550,226 (equivalent to approximately HK$8,780,945).

Xing Yuan rented an office premise owned by Hai Feng. To avoid paying an increasing rental fee in Singapore and facilitate the future business operation of Xing Yuan, the Group therefore decided to purchase the property which comprises a terraced factory building of three storeys with a total salable area of approximately 8,417 square feet upon the completion of acquisition of Xing Yuan. The purchase price amounted to S$4,500,000 (equivalent to approximately HK$ 25,489,350), which was determined with reference to independent property valuer’s report as at 31st March 2010.

As Xing Yuan’s substantial shareholder, COSCO Singapore, is a wholly-owned company of COSCO, while COSCO is also a controlling shareholder of the Company, the acquisition of 100% of the issued share capital in Xing Yuan therefore constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of the independent shareholders. Meanwhile, in consideration of upon the completion of the acquisition of Xing Yuan and the newly incorporated Shin Chung Lin, it is anticipated that the business volume of Yuantong will substantially increase and its proposed annual cap amount of the turnover for the supply and installation services provided by Yuantong and its subsidiaries to the COSCO Group for the year ending 31st December 2010 shall be increased from HK$495,000,000 to HK$662,000,000. Therefore, according to the Listing Rules, the proposed revised cap is subject to the approval of the independent shareholders.

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About Xing Yuan and Shin Chung Lin
Xing Yuan is principally engaged in the business of sales and installation of marine equipment and spare parts for vessels and related services including marine transportation, and sales, exporting and importing of raw materials and products based in Singapore. It is anticipated that Xing Yuan will leverage on its geographical advantage in Singapore to develop material supplies business and provide efficient and high quality services for all fleets in the world.

Shin Chung Lin is a company newly set up by the Group in Japan for the purposes of carrying on the business of sales and installation of marine equipment and spare parts for vessels and related services including marine transportation, and sales, exporting and importing of raw materials and products based in Japan. According to the statistics released from the General Administration of Customs of the PRC, China’s imports of marine equipment in 2009 amounted to US$4,694 million, in which imports from South Korean and Japan accounted for 55%, i.e. the largest share, with a total value of about US$2,574 million.