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China Shipping Development Co. (SHA: 600026), the country¡¯s biggest coastal energy shipper, said Tuesday its unaudited net profit rose 17.8 percent in the third quarter of 2005 from the same period of last year.

But the quarterly net profit fell about 29 percent from the second quarter, Macquarie Bank said in a research note.

¡°China Shipping¡¯s third-quarter results came in as weak as expected owing to lower freight rates and higher bunker costs,¡± it said.

China Shipping said its net profit surged to 548.6 million yuan (US$67.8 million) for the three months ending in September, compared with 465.9 billion yuan from the third quarter in 2004.

Profit for the first nine months of 2005 rose about 59 percent to 2.16 billion yuan from 1.36 billion yuan in the same period a year earlier.

The firm said in August that substantial profit growth would continue in the third quarter as demand rose for oil and coal shipping in fuel-hungry China.

Macquarie said the liner¡¯s gross margin was 35.1 percent, 1.5 percentage points below expectation. But it believed the margin would rebound in the fourth quarter due to rising freight rates and declining bunker costs.

Shares in China Shipping eased 2.82 percent to 6.55 yuan Tuesday. They have fallen about 46 percent from their peak of 12.8 yuan in April as international freight rates for bulk and oil carriers hit a more than two-year low in August before recovering.

¡°The stock still looks cheap from our perspective,¡± Macquarie said. It was trading at 6.4 times projected 2005 earnings with a dividend yield of about 6.3 percent, the investment bank added.