SS Teo’s Singamas Container Holdings has entered into an agreement to sell four of its container manufacturing units in China to Cosco Shipping Financial Holdings for a total price of RMB3.8bn ($562m), following on from the announcement of a potential deal in March.

Under the agreement, Singamas will sell the four subsidiaries Qidong Singamas, Qingdao Pacific, Ningbo Pacific and Singamas Container (Shanghai) to Cosco. Qingdao Pacific also has a fully owned subsidiary Qidong Pacific.

Singamas believes that the disposal will be an important step towards the transformation and upgrading of the group’s traditional business, which includes shifting the group’s business focus to logistics services and the manufacturing, R&D and sale of specialised containers.

Singamas will use the proceeds from the sale for debt repayment, distribution of special dividend and general working capital.

In January, Maersk’s container manufacturing unit Maersk Container Industry also decided to ditch manufacturing dry containers and will fully focus on growing its cold chain business.

Cosco is currently engaged in the container manufacturing business through its subsidiary Shanghai Universal Logistics Equipment, which has an annual manufacturing capacity of 500,000 teu. It also holds around 14.5% equity interest in CIMC, the world’s largest container manufacturer with over 40% of global market share.