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 At 0732 GMT, Cosco shares were trading at S$2.89, down 14%, while the Straits Times Index was down 0.9% at 3062.40 points.
But Ji said that the cancellation of the contract was better for the company because it will have room to take on new contracts. "Because of the increase in steel prices, we can quote higherrates now," he said. However, a research report by Morgan Stanley said that further cancellations are possible because Cosco has not received down payments for 20% of its existing shipbuilding contracts. "We could see further decline in Cosco's order book should customers choose to let the contracts lapse," the report said. It did not give an estimate of possible cancellations. Ji said that investors should take note of a separate announcement Wednesday of new offshore and tanker building contracts worth US$292.3 million. "The contract has been priced in yuan that will give us less risk (against exchange rate)," he said, adding that the company is confident of securing more contracts during the year. However, he declined to mention any potential contracts in the pipeline.        |
 10th April 2008, 09:45 PM |
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DJ MARKET TALK: Cosco Off 15.2%, Extends Fall On Short-Selling 0404 GMT [Dow Jones] Cosco (F83.SG) extends early morning fall, down 15.2% at 3-week low of S$2.85 on huge volume (most active on SGX), as traders take advantage of US$202 million order cancellation to short stock. "It's not surprising. It's not that they can't deliver. It's that the client can't pay because the (credit) horizon has changed," says foreign house dealer. CIMB says while investors' confidence hit, shipbuilder's strength still lies in its strong orderbook, potential new inflow as it expands production capacity. Adds, firm has no other contract with Norwegian firm Red Flag, which pulled out of deal. Keeps Outperform call, S$5.55 target. Orderbook suggests stock may find support at S$2.80-S$2.85 band. DJ Cosco President: Don't Expect More Order Cancellations SINGAPORE (Dow Jones)--Singapore-listed shipbuilder Cosco Corp. (F83.SG) Thursday said that it doesn't expect more cancellations of contracts and talk of the company announcing more order cancellations were market rumors. "I don't see anymore cancellations... We don't believe all those market rumors, who says there will be more cancellations," Ji Hai Sheng, the company's vice chairman and president, told Dow Jones Newswires. On Wednesday, Cosco announced that it has canceled a US$202 million project announced in May to build a rig hull for Norway's Red Flat A.S. as the customer didn't provide deposits before work on the rig would start. News of the cancellation sent Cosco shares tumbling to a three-week low of S$2.84 at 0404 GMT Thursday, down 15.5% from Wednesday's close of S$3.36. |
2 cosco directors ( Zhou Xie Dong & Ang Swee Tian ) purchased from open market today between $2.86 ~ $2.89
I think it might plunge down further ... support at 2.6 ~ 2.7
not to worry...
hv a good nite rest........In stock market investment ,,,anything is possible...
STI today created (in c/stick chart) a spinning top ......with some gap dwn.......
With a little bit of luck tomorrow....who knows....
should it open higher than today's opening point.....
and proceed all the way north.....
then we'll hv. a morning star or an abandon baby......and we are on track with a bull reversal.....
But if it choose the other way round......
then..it's going to be DOOM..!!!!!!
So before we lay dwn. to sleep ...do ,,,a little bit pray...hogn....
Good Luck...Cheers....!!!!
Ping009 ( Date: 10-Apr-2008 18:51) Posted:
|
April 9, 2008
Cosco Corporation
Order Cancellation:
Only Just Beginning
Quick Comment:
the decline in new orders from dry bulk shipbuilding
segment through offshore-related orders this year.
However, cancellation announcement of the GM5000
semi submersible hull contract will create doubts in
investors? mind and stock could under-perform in the
near term. Stock is currently trading at 13x 08e/12x 09e,
but our earnings estimates and PT are under review.
We believe COSCO(S) could offsetWhat's new:
US$292.3 million to build two shuttle tankers and the hull
of a semi-submersible production unit; and b) the
termination of a US$202 million contract to build a
semi-submersible hull for Norway?s Red Flag A.S., as
the deposit terms has not been fulfilled.
COSCO announced a) contracts totalingPositive: A) Credible customer and 100% deposits
for all the offshore projects reduce the probability of
future cancellation;
B) COSCO(S) has added capacityand capabilities at Nantong, Qidong, and Lianyunjang
shipyards to tap growing offshore rigs/production
platform demand;
be mitigated
smaller yards? inability to deliver on their shipbuilding
projects.
C) shipbuilding oversupply couldwith the cancellation of ship orders andNegative: A) Further cancellations probable ?
COSCO(S) has not received down payments for 20% of
its existing shipbuilding contracts. We could see further
decline in COSCO(S)?s order book should customers
choose to let the contracts lapse;
concerns on dry bulk ships remain ?
book is 56% of the global dry bulk fleet. This could result
in overcapacity situation considering current slower
global growth outlook and resulting decline in global
trade;
due to significant increases in steel, equipment, and
labor costs. We expect 2% lower margin YoY if steel
price increase surprises by 20% per annum.
Morgan Stanley does and seeks to do business with
companies covered in Morgan Stanley Research. As
a result, investors should be aware that the firm may
have a conflict of interest that could affect the
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should consider Morgan Stanley Research as only a
single factor in making their investment decision.
B) overcapacityCurrent orderC) shipbuilding margin could decline furtherFor analyst certification and other important
disclosures, refer to the Disclosure Section,
located at the end of this report.
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Morgan Stanley Asia (Singapore)
Pte.+
Praveen K Choudhary
Singapore Multi-Industry
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Xin Jin Ling
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M O R G A N S T A N L E Y R E S E A R C H
A S I A / P A C I F I C
Stock Rating
Overweight
Industry View
Attractive
Key Ratios and StatisticsReuters: COSC.SI Bloomberg: COS SP
Singapore Offshore & Marine
Price target
S$6.00Shr price, close (Apr 9, 2008)
S$3.36Mkt cap, curr (mn)
S$7,55052-Week Range
S$8.20-2.57Sh out, basic, curr (mn)
2,237.7EV, curr (mn)
S$7,104Net debt/cap (12/08e) (%)
(119.4)ROE (12/08e) (%)
61.0Shrs out, basic, per-end (12/08e) (mn)
2,253S'hldr eqty (12/08e) (mn)
S$1,393RNOA (12/08e) (%)
135.5e =
Morgan Stanley Research estimatesFiscal Year ending 12/07 12/08e 12/09e 12/10e
ModelWare EPS (S$)
0.15 0.26 0.29 0.32Prior ModelWare EPS (S$)
- - - -EPS, basic, rpt'd (S$)
0.15 0.26 0.29 0.32Prior EPS, basic, rpt'd (S$)
- - - -Revenue, net (S$ mn)
2,262 4,375 5,997 7,040ModelWare net inc (S$ mn)
346 587 656 730P/E
37.4 13.0 11.7 10.6P/BV
13.5 5.5 4.3 3.6EV/EBITDA
24.0 7.3 6.4 6.0Div yld (%)
1.2 3.6 4.4 5.4e =
Morgan Stanley Research estimates2
M O R G A N S T A N L E Y R E S E A R C H
April 9, 2008
Cosco Corporation
Details
COSCO announced a) contracts totaling US$292.3 million
to build two shuttle tankers and the hull of a
semi-submersible production unit; and b) the termination of
a US$202 million contract to build a semi-submersible hull
for Norway?s Red Flag A.S., as the deposit terms have not
been fulfilled. They received the contract in May 2007.
Positive
A) Offshore contracts seem secure:
project is from a US customer, and the deposit has been
secured. Deposits and progress payments for other
offshore projects have also been received, reducing the
probability of these contracts being cancelled.
The recent offshoreB) Increased capacity to leverage on high oil price:
Current high oil prices could prompt E&P companies to
order more rigs. COSCO(S) has added capacity and
capabilities in the offshore segment through investment in
newer yards, namely, Nantong, Qidong, and Lianyunjang.
C) Oversupply could be mitigated
ship orders and smaller yards? inability to deliver on their
shipbuilding projects. This could result in better demand/
supply situation. According to Worldyards, newer shipyards
might struggle to deliver dry bulk ships and cease operation,
resulting in 9% lower supply.
with the cancellation ofNegative
A) Further cancellations probable:
received down payments for roughly 20% of its existing
shipbuilding contracts. We could see further decline in
COSCO(S)?s order book should customers choose to let the
contracts lapse.
COSCO(S) has notB) Overcapacity concerns on dry bulk ships remain:
Current order book is 56% of the global dry bulk fleet. This
could result in overcapacity situation, considering current
slower global growth outlook and resulting decline in global
trade.
C) Downside to margins persists:
decline further due to significant increases in steel, equipment,
and labor costs. We expect 2% lower margin YoY if steel price
increase surprises by 20% per annum.
Shipbuilding margin couldCompany Description
COSCO Corp (Singapore) Limited is the largest ship repair and
marine engineering group in China, with interests in seven
mainland shipyards. COSCO (S) is engaged primarily in ship
repair operations, but also derives revenue from dry bulk
shipping and shipping agency. COSCO (S) is a subsidiary of
China Ocean Shipping (Group) Co (COSCO Group), one of the
largest shipping groups in China and one of the 10 largest
shipping conglomerates in the world.
Singapore Offshore & Marine
Industry View: Attractive
MSCI Country: Singapore
Asia Strategist's Recommended Weight: 6.9%
MSCI Asia/Pac All Country Ex Jp Weight: 4.9%
3
M O R G A N S T A N L E Y R E S E A R C H
April 9, 2008
Cosco Corporation
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4
M O R G A N S T A N L E Y R E S E A R C H
April 9, 2008
Cosco Corporation
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M O R G A N S T A N L E Y R E S E A R C H
April 9, 2008
Cosco Corporation
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M O R G A N S T A N L E Y R E S E A R C H
Industry Coverage:Singapore Offshore & Marine
Company (Ticker) Rating (as of) Price (04/09/2008)
Praveen K Choudhary
Cosco Corporation (COSC.SI) O (09/17/2007) S$3.36
Labroy Marine Limited (LABR.SI) O (10/10/2007) S$2.83
SembCorp Marine (SCMN.SI) O-V (11/01/2007) S$3.73
Stock Ratings are subject to change. Please see latest research for each company.
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Japan
Cosco Corporation Order Cancellation:
Only Just Beginning Quick Comment:
the decline in new orders from dry bulk shipbuilding
segment through offshore-related orders this year.
However, cancellation announcement of the GM5000
semi submersible hull contract will create doubts in
investors? mind and stock could under-perform in the
near term. Stock is currently trading at 13x 08e/12x 09e,
but our earnings estimates and PT are under review. What's new:
US$292.3 million to build two shuttle tankers and the hull
of a semi-submersible production unit; and b) the
termination of a US$202 million contract to build a
semi-submersible hull for Norway?s Red Flag A.S., as
the deposit terms has not been fulfilled. Positive: A) Credible customer and 100% deposits for all the offshore projects reduce
divy only 4cts meh ??? chunbo ???
got the followng from SGX leh...
|
Company |
Particulars |
Ex-Date |
Rec. Date |
Paid/Payable |
|---|---|---|---|---|
 COSCO CORPORATION (S) LTD |
DIVIDEND : SGD 0.03 SPECIAL ONE-TIER TAX | 21 Apr 2008 | 23 Apr 2008 | 07 May 2008 |
| COSCO CORPORATION (S) LTD |
DIVIDEND : SGD 0.04 1ST & FINAL ONE-TIER TAX | 21 Apr 2008 | 23 Apr 2008 | 07 May 2008 |
hotstock ( Date: 10-Apr-2008 19:26) Posted:
|
Why the heavy sell down? Why does contract is being cancelled? When business is good, shipping companies does not mind to build more ships. But when economic is going down, what happens? Factory orders drop, shipping business will also be affected. Therefore, there are more fear of more cancelling of contract.
And in view of U.S. recession, it will definitely affect world demand. The next-in-line countries that suffer from U.S recession will be Asia who export most of our goods to them.
When this take place, commodity prices will fall sharply.
Thanks for your consolation. But i am not too optismistic Dow will turn green tonight looking at all the negative news... Sigh..
Within your contra period ......
its tough to predict.......
But ...in my opinion......
Should STI goes back north in red....
And should Cosco can get back into abv. 2.90.....and then shoot abv.3.00 thereafter..........
You'll stand a very good chance....
To achieve...Good Luck...
Cheers....!!!!
Ping009 ( Date: 10-Apr-2008 18:30) Posted:
|
You guess with this piece of news will prevent major selldown again tomorrow?
Me bought 5lots at 2.99 today. wonder if i can pull out within the contra period.
anyone can advise?
Sure will have sleepless night liao..
Cosco said on Thu that rising steel prices would not hurt its margins after its shares tumbled more than 15% on market talk it may face more order cancellations.
Cosco President Ji Hai Sheng told Reuters that one of its core businesses -- which buys steel for the construction of new ships -- was affected by steel prices, but only accounted for 20% of the company's total turnover.
South Korea's POSCO, the world's fourth-biggest steelmaker, raised its prices by as much as a fifth on Thu as it sought to pass on soaring raw material costs.
"No, we do not have any further clients cancelling contracts," Ji said.
Ji said that given the large number of shipbuilding contracts already in the bag, the firm would focus more on offshore rigs.
"We signed a lot of contracts for new ship buildings, a lot of these slots have been taken up," he said. "Now we will concentrate on offshore (rig) building."
He declined to comment on whether this year's order book would surpass last year's US$6.5 billion, but said he expected most deliveries to be on time.