COSCO SHP SG    Last:0.128    -0.002

CoscoCorp

CITI - Buy: Moving Toward Net Earnings of S$1bn by 2010

 Target price boost ? We have: (1) raised our FY07E to 09E EPS estimates by between 7% and 32%, (2) introduced FY2010E net earnings of S$1.0bn, (3) changed our valuation of the group?s bulk carriers from vessel market prices to yard valuations in anticipation of a possible asset swap/acquisition next year for 19% in CSG and the 50% stake in the Cosco:Kawasaki JV, and accordingly, (4) raised our target price from S$6.55 to S$9.30. Reiterate Buy (1L).

 Worth thinking three to four years ahead ? We believe investors have much to look forward to. Not only do we think new orders will continue growing strongly for Cosco Shipyard (CSG), restructuring could change the way the market values COS, shipbuilding capabilities may improve meaningfully, and we believe group earnings have a likelihood of reaching S$1bn by 2010.

 New orders and another catalyst ? CSG has announced a major group of shipbuilding contracts worth S$2bn, bringing YTD new orders to S$9.4bn (S$0.86bn in FY06). We believe another potential catalyst for the group is if SembMarine agrees to exchange its 30% in CSG for a stake at COS level, which would eliminate the current large MI portion taken out from COS.

 Greater China conference ? At our recent event, management indicated that the group?s long-term prospects in new building, ship repair and offshore engineering are robust. COS?s capacity buildup over the coming years appears manageable as even in a market downturn, potential jobs from the parent (average fleet age 20 years) is adequate to fill its expanded capacity.

 

CIMB - OUTPERFORM - Maintained, S$6.95 - Target: S$8.60)
Quick takes - Unstoppable order momentum

Cosco had secured shipbuilding contracts to build 29 bulk carriers (57,000dwt to 92,500dwt) worth a total of S$2.0bn. Deliveries will take place between Oct 2009 and Dec 2011. We are raising earnings estimates by 4-11% for FY08 and FY00, to account for the order win and higher order book assumption. Target price raised to S$8.60, still based on sum-of-the-parts basis. Cosco is well positioned to ride on the strong demand for bulk carriers and wave of shipbuilding orders flowing into China, overtaking market share from the Korean and Japanese shipyards. We like the stock for its massive capacity ( 1.73m dwt), supported by 3-year CAGR of 52%. Catalysts include continuous higher value wins, potential sale of its 12 bulkers in the medium term and more full jack-up rig orders. Maintain Outperform

 

Still winning big orders. Numerous upgrades in tp by brokers.

Citigroup raised the target price for Cosco shares to $9.30 from $6.55 with a "buy" call on the stock.

"We believe group earnings have a likelihood of reaching $1 billion by '10," said Citigroup analyst Kevin Chong.

JPMorgan also lifted its price target to $8.40 from $8 and maintained its "overweight" rating for the stock, while Merrill Lynch upped Cosco's price objective to $9.15 from $5.90 with a "buy" call.

 

DBS Vickers - Cosco Corporation

Mega orders, highlights from Cosco Nantong shipyard visit Buy S$6.95 Price Target : 12-month S$ 9.00 (Prev S$ 6.10)

Story: The group has won mega shipbuilding orders worth US$1.34bn, to build

29 bulk carriers for delivery between 2009 to 2011. Separately, we visited Nantong shipyard and are impressed with its rapid development, which is poised for further expansion.

Point: These contracts will raise Cosco Corps order book by 28% to US$6.1bn, comprising 90% in shipbuilding and conversions, and 10% in rigbuilding. Thus, 92% of our FY08 and 71% of our FY09 forecasts are in the bag. The bulk of its existing contracts will be delivered in FY08 (35%),

FY09 (40%) and FY10 (20%). It remains the leading shipyard clinching the highest amount of contract wins this year (despite being a new player in shipbuilding and rigbuilding). Its order book now exceeds SembCorp Marine (about US$6bn) and Yangzijiang at US$5bn, but lags behind Keppel Corp (US$8.6bn).

Relevance: We have raised our net earnings forecasts by 10% and 19% for

FY08 and FY09 respectively on the back of the new order wins and higher order win assumptions. We raised our target price to S$9.00 based on a) 12x on its bulk shipping earnings, following the re-rating of these stocks, and the 50% rise in capital values of the vessels since January 2007 and b) 30x

FY09 shipyard earnings vs its 3-year EPS CAGR of 53%. Maintain BUY, target price raised to S$9.00.

 

Correction from my previous post

Gain of S$230 million about US$155 million

 

I do not know much of those financial fraud or dismay about SembMarine's lost in unauthorised forex trading, but I do STRONGLY believe that the mkt had oversold this event, SembMarine and COSCO.

The report says that SembMarine had annouced that they had sold part of their stake of COSCO after announcing the unauthorise forex dismay. Which means that there was a buyer already to buy from them the 39 million of shares. There should not be excess share in the mkt that created over supply and hence the share of COSCO plunged this morning. Not forgetting that they still have 111 million of share after the sale, which means they know COSCO still have potential in the growth.

The gain of US$230 million about US$155 million is good enough to settle the forex loss (loss about US$165 million). Why the panick of sale this morning, I dun understand. In fact I dare to buy in SembMarine this morning if not all my fund is tied up to other stocks. The share opened for trading @$4.70 and it dropped to $4.60 almost immediate before recovering. I see that the mkt is really in panic state this morning, and this is the best time for cool mind retail investor to gain from it.

I got my COSCO @7.25 and 7.15 this morning. I think I will keep this shares I bought as I felt it was a steal. PLUS China fund will come in sometime next year, I dun see any reason for this counter not to visit $10.00.

 

Read this before your buy.

http://forum.channelnewsasia.com/viewtopic.php?t=98517&postdays=0&postorder=asc&start=180

 

ok zhuge liang...I buy what you said!

 

Cosco Corp plunged after news that SembMar has sold part of its stake in the company. The move dampened investor sentiment for the shares of the Chinese shipbuilder, dealers said.

"The market is following SembMarine's move with the mentality: If a big player sells, so will I because there might be some downside risk I don't know about," a dealer said adding that he felt Cosco shares were overvalued.

SembCorp Marine said it has sold part of its shareholding in the firm for a gain of about $230 million. The company said in a statement that after the sale of the 39 million shares it would still hold 111.4 million shares, or 4.98% of the share capital.

The share sale was announced only hours after SembMar said it had removed a finance executive after he allegedly undertook "unauthorised" forex transactions which may lead to potential losses for the firm.

This stock still has huge growth potential. It's a buy after substantial falls.

 

i believed in "invisible hand" theory.. PRC is having it's all important 17th Congress in Beijing... whatever it is.. it will be a real big loss of face if its market crashes during the period of meeting. Something the top leaders will not want to see if u know they cannot-lose-face mentality. (purely personal opinion)

In fact, if there is any good news (that has a positive influence to its security market) on the economic front as the leaders are setting the vision for the next fews years, it will go up further.

So i will say it will not crash tomorrow. Don't worry.

 

ok, i generally do not like to give specific advice (since the more specific, the more one risks being wrong. haha), but might not be wise to short cosco tmrw.

there's very, very strong buy support. look at the busd, you'll know what i mean. consistent 100 lots buy ups. the period from 1359 to 1421 hrs, for large lots traded, was all buy ups. only small fries selling. only later in the day abt 770 did you see larger lots selling (measly 50 lots sold in a few batches only).

and closed with an 822 lot buy up.

tmrw might gap up on opening if dow closes up.

this is one for long term holding. the trade/short might not be worth since risk is too great for the thin reward...

caveat emptor...

 

Tomorrow still not the ripen time to short this gem.  Unless china markets crash tomorrow.

 

TA charts look bullish all of a sudden. Acc/Dist and Chaikin on uptrend. Price has cut above upper bollinger band.

 

is this counter play up by bbs? shoot up so high today. i shorted at 7.50 went up to 7.80 had to cover short at 7.70. think that tomorrow it will shoot above 8. anyone know what is the reason?

 

shoot up alot today...anybody know wat good news? or..

 

hee...looks like my naked short on this burger at 6.75 got chance to be redeemed at a lower price tomor fri liao siah !! :P hee....v. lucky lately :P

 

no...mkt corrections..hee...wah! hope my naked short on this burger a win again this Fri !! hee...

cheers !!

 

Coscop starts to slide to 6.8, any comments? Proft taking?... sell short?

 

oh no!! 6.95...wetting my pants now! hee...ok..naked short liao :P wish me luck !!

 

 

yes...very nice chart for SHORTING !! hee...just shorted 3x6.75 !! wish me luck !!

getting greedier each day !! :P