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Cosco Corporation: BUY S$3.16; Bloomberg: COS SP
1Q08 net earnings doubled;
Price Target : 12-month S$ 4.00
Story: 1Q08 net earnings doubled to S$84m, in line with our expectations.
This accounts for 17% of our full year forecast - 1Q is a seasonally low
quarter. Shipping benefited from firmer charter rates, leading to a 36% yoy
rise in sales and 46% rise in net profits to S$37m in 1Q08. Cosco Shipyard
Group more than doubled its sales from $306m to $653m with growth from
shiprepair, conversions, offshore while shipbuilding made its maiden
contribution at $85m in revenue. Pre-tax margins improved to 20.7% despite
contributions from the lower margin shipbuilding projects. Group results
would have been better but for the forex loss of S$18m which offset gains
from the sale of scrap metal (S$18m). Despite a rise in effective tax rate
to 14% due to changes in tax laws in China and higher contributions from
CSG, net margin maintained at 11.7% for the group.
Point: The group has collected all the outstanding deposits on its
shipbuilding orders, amounting to 20% downpayment, including the seven
vessels. Net order book is now US$7.1bn and we expect the group to focus on
securing more offshore orders to compensate for an expected slowdown in
shipbuilding orders. Key risks are the rising steel prices and
strengthening Rmb, which will affect margins in 2009, as the group is able
to lock in steel prices and sell forward its US$ one year ahead.
Relevance: Maintain Buy, no change to earnings forecasts and target price.
Near term catalyst is the acquisition of 19% stake in Cosco Shipyard Group.
The recent de-rating of shipyards should pave the way for management to
increase its stake in CSG at an attractive pricing. Assuming an all cash
deal and acquisition P/E at 10x for CSG, this should raise its 2009 net
earnings by 15%.
Simply, its sale of green back 4.5b of shares, combined with the 6b preferred stock sale last week, all these had signaled bang is likely to face more write-downs in the future and may need to raise even more kapital.
Not sure our GIC executed their rights to acquire the preferred stock??? However, BT Labour Day main page,saw the statement " Citi and UBS presented rare opportunity, explains transparency conundrum"&*&*^%^%%^%
i think there was one other financial institute tt called for a sell or hold too...forgot which one...is it DMG? tt period of time when got major Cosco selldown...it came out a lot of buy/sell/hold calls...
mm...the report below by Edwinders ...does it mean Citigroup today said it wants to keep its sell rating?? i thought they would have changed views or at least have a change of tone...why still target a down price of $2.70...jux peculiar
I noticed that citi bank is the odd one calling for a sell. Most other analysts maintain buy call, tp set around $4. What are the risks cited in citibank's report ? Anyone know ? See if those are real risks, no harm take a look to see the down side.
SINGAPORE, May 2 (Reuters) - Cosco Corp <COSC.SI> rose as
much as 6 percent to S$3.35 after the firm said its first-quarter
net profit doubled and that it was confident about prospects in
2008.
For more details, double-click on [ID:nSIN323459].
But Citigroup said there is downside risk to Cosco's shares,
citing margin concerns, increased forex volatility and higher tax
rates, as well as a potential oversupply of bulk carriers.
Citi, which kept its investment rating at "sell" with a share
target price of S$2.70, also said Cosco's order book could shrink
as the firm is not able to clarify if current contracts are
secured with downpayment.
However, JPMorgan maintained its investment recommendation
for Cosco at "overweight" with a share target price of S$3.80 as
the earnings were in line with the U.S. investment bank's
estimates.
For today how high this stock will soar? Any opinions?
... notice many forumers like to mention about the dow... for me, not too bothered unless it crashed more than 5% in a single session, then i want to know what happen over there.
... otherwise, i just stick to old wisdom: "in investing, it is never wrong to change your mind. it is only wrong to change your mind and do nothing about it".
This share is crazy one, dow up also will down if shortist up to their tricks again.
...was at last evening press conference by cosco... top brass said in future, if no deposit is received, it will not be included in the contract order-book. Is that reassuring enough for investors? At least, now align with industry practice like SembMar and KepO&M.
below 3 or not depends dow tonight!
As far as the coy don't scrutinise the interanl management process, another case of order cancellation is not impossible loh. Slim, but got chance, strike leow. The moral of the story is, when there is hope, dun give up. Cheers.
don't expect it will below $3.
Below 3.00, buy in Coscoa, watch out Kepland & SGX long or short also can. See timing. Can Q now.
Published May 1, 2008
Cosco to be more careful in announcing new deals
By
VINCENT WEE
STUNG
by previous sharp reactions to adverse news about contracts, Cosco Corp
(Singapore) has instituted a new policy of not announcing newbuilding
contracts till after the first instalment has been paid. The solitary
order cancellation for a US$202 million oil rig project last month
caused a sharp sell-off in the company's shares.
 |
'We're cautiously optimistic of our ability to sustain growth and profitability in 2008 even with the challenging backdrop.'
- Ji Hai Sheng, president |
Cosco went on to reiterate that all instalments due on the 113 new ship
buildings it has currently have been received as at the close of books
for the quarter, including the seven outstanding ones mentioned in an
earlier Bloomberg report.
Reflecting the group's buoyant
results, first-quarter net profit attributable to equity-holders
doubled to $83.9 million. Turnover for the three months ended March 31
also doubled from $355.8 million to $717.7 million.
The key
ship repair, shipbuilding and marine engineering division, which
contributed 91 per cent of total revenue, had a robust growth in
turnover to $653.1 million from $306.9 million previously. The rise
came on the back of progressive revenue recognition for the group's
healthy stream of high-value offshore marine engineering and ship
conversion projects and also contributions from the shipbuilding
segment, Cosco said.
Gross margin also improved from 26 per cent to 28 per cent as the group
worked on raising revenue per ship repaired. Cosco plans to move up the
value chain to focus on higher value-added jobs like tankers, chemical
tankers and container ships. By percentage, revenue from ship repair
has been halved from 42 per cent in the previous corresponding quarter
to just 21 per cent in the first quarter of this year.
The
group has a healthy year-to-date order book of US$7.09 billion for
progressive delivery up to 2011. In line with this, Cosco is adding
capacity and expansion plans are on track to support these projects.
'To support our growing order book, our capacity expansion is on
track,' said Cosco Corporation president and vice-chairman Ji Hai Sheng.
While posting its 21st consecutive quarter of growth, Cosco is mindful
of the challenges ahead and is preparing for them. The company
recognises that rising steel and labour costs and a depreciating US
dollar will be issues it has to face.
Already, steel prices and
foreign currency movements have proved to be a double-edged sword as,
under miscellaneous gains, the group posted an $18.2 million gain on
sale of scrap metal but this was offset by an $18.4 million forex loss.
This resulted in a 63 per cent fall in other gains to $6 million.
Cosco said that it would factor such rising costs in pricing for future
projects and diversifying its forex exposure. Customers have so far
'been able to accept' a rise in prices, Mr Ji said. 'Set on an even
keel with our multiple key earnings pillars of offshore engineering,
ship repair and conversion and shipbuilding, our group is cautiously
optimistic of our ability to sustain growth and profitability in 2008
even against the challenging backdrop,' he added.
Cosco shares closed eight cents higher at $3.16 yesterday.
fri = take profit day
haha
Got chance lah, crude oil went down and Gold unable to sustained. Bur Fri is not a good day to trade in Spore leh. How? Bears' brother??
Cosco reported on Wed a doubling in Q1 profit and said it was confident about prospects this year.
Top shipbuilders such as Korea's Hyundai Heavy Industries and Daewoo Shipbuilding have postedstrong profit in recent quarters as high-value orders since '05 offset the impact of spiraling raw material costs and fears of a slowdown in the global economy.
"Our group is cautiously optimistic of our ability to sustain growth and profitability in '08 even against the challenging backdrop," Cosco President Ji Hai Sheng said in a statement.
He acknowledged, however, that the business environment has become tougher due to rising steel and labour costs as well as the depreciating US$.
Cosco said its order book for offshore oil rigs and vessels at its China shipyards stood at US$7.1 billion which would keep it busy till '11, up from US$6.5 billion at the end of last year.
The firm was continuing to build capacity to help it cope with orders, it added.
Cosco, majority-owned by China Ocean Shipping (Group) Co, posted a net profit of $83.9 million for the 3 months to the end of Mar -- up from $41.9 million a year ago -- due to higher revenue from ship repair, shipbuilding and marine engineering.
Sales more than doubled in the quarter to $717.7 million. But some investors are concerned that shipping firms will put off their fleet expansion plans due to uncertainty about the global economy, although rig-building is likely to stay bouyant thanks to high oil prices.
The firm has received the outstanding deposit for 7 vessels valued at about US$280 million this week, a Cosco official said on Wed.
tonite DJ will chiong,
i expect at least 100 points.
S&P chiong
Nasdaq chiong
Huat ah
hmmm...TalkingTigress...wad u said is also quite true..no surprises from this company...near term and from the past looks good...but looking forward future wise...not too sure when Citi analysts bring them down to sell
SINGAPORE, April 30 (Reuters) - Shipbuilding and repair firm Cosco Corp (Singapore) (COSC.SI:
Quote,
Profile,
Research), controlled by China's biggest shipping company, said on Wednesday its quarterly profit doubled due to higher sales.
Singapore-listed Cosco, majority-owned by China Ocean Shipping (Group) Co, said net profit for the three months to end-March rose to S$83.9 million ($61.8 million) from S$41.9 million a year ago.
Cosco shares slumped 15 percent close to a one-year low a day after the firm said on April 9 that it was cancelling a $202 million rigbuilding project for Norway's Red Flag AS after the customer failed to pay a deposit.
Citi analysts downgraded Cosco to "sell" this month and slashed their target price, citing risks of more contract cancellations due to a global economic slowdown, spiraling steel prices, and a potential oversupply of bulk carriers. (Reporting by Daryl Loo and Tan Wei Xin)
This Daryl and Tan Wei Xin are probably hoping to buy low, but they won't succeed as the results already spoke for itself. So many other houses are maintaining a BUY call. Why cite only Citi???????????
hopefully it open at 3.45 and all the way up to 3.60
