COSCO SHP SG    Last:0.13    -0.001

CoscoCorp

Sembcorp Marine: Buy S$4.40 , Bloomberg: SMM SP
Profiting from sale of CJ70 jackup
Price Target : 12-month S$ 5.60 (Prev S$ 5.25)
By: Janice CHUA +65 6398 7954
Jeremy THIA +65 6398 7974


·                 Seadrill exercises option to buy CJ70 jackup from SMM.
·                 This sale estimated to add S$105m to SMM’s bottom line over FY10/11.
·                 FY10/11F raised by 5% and 13%; factoring in sale of jack up and upward revision in Cosco Corp’s earnings.
·                 Maintain BUY, TP raised to $5.60.

Seadrill exercises option to acquire SMM’s CJ70 jackup. Seadrill announced that it has exercised its option to buy a CJ70 design jackup rig. This comes just two days after it revealed that it had entered into an option agreement with SMM to buy it. This was contingent on Seadrill’s ability to secure a long term charter for the rig, which has just materialized. The jackup is presently under construction at SMM’s Jurong Shipyard (JSY), with expected delivery date at end 1Q2011.

Boost to SMM earnings. To recap, the CJ70 jackup is a high spec, harsh environment jackup rig originally being built for Petroprod, prior to having its newbuilding contract terminated by JSY as milestone payments were not received. As SMM has collected 50% of the initial contract value of US$442m from Petroprod but has not picked up any profits, there is significant upside from this sale. Based on the sale price of US$350m (excludes owner furnished equipment) we estimate this would add c. S$36m and S$69m to SMM’s FY10/11 net profit forecasts.

Beneficiary of recovery in Cosco’s earnings. We have also raised Cosco Corp’s net earnings by 6% for 2010 and 44% for 2011, on the back of an expected influx of orders from the offshore sector. YTD, Cosco has secured US$600m worth of contracts from offshore and shipbuilding sectors, reversing the trend of a decline in order book. SMM’s FY10/11 earnings forecasts are hence raised by 5% and 13% to account for the sale of the jackup and SMM’s 30% stake in Cosco Shipyard Group

Target price raised to S$5.60. Our SOTP valuation for SMM is raised to $5.60 (prev S$5.25), implying a 16x PE on FY10 earnings. Potential catalysts include 1) new offshore contract wins for SMM, specifically the award of Petrobras’ tenders in 3Q10, 2) new contracts for Cosco Corp, and 3) smooth execution on its shipbuilding order book.

 

take profit or cut loss for contra traders

those hold long term can wait..

ozone2002      ( Date: 15-Apr-2010 21:57) Posted: big down bar on large vol..forming an island formation after breakaway gaps.. time to sell.. protect ur profits rather than let it be eroded by the market  look out for exhaustion gaps.. DYODD..

 

is it not dangerous to short this one now, since it is still in CD till next week? some fraction of buyers may only bought this for dividend and long term investment.

 

happy for those who sold yesterday... today we use our yesterday profits to short and profit some.

tomorrow, this stock likely gap down so hope all who profited from the upmoves and use your profits to short for more profits.

expect to see cosco retrace downward correction in coming sessions to 1.60 and lower may be.\

huat ah!

178investors      ( Date: 14-Apr-2010 15:44) Posted: sorri ... think i run road first

 

wow...then pity those who got it at 1.84 today~~

 

big down bar on large vol..forming an island formation after breakaway gaps..


time to sell.. protect ur profits rather than let it be eroded by the market

 look out for exhaustion gaps..


DYODD..

 

aya....today general mkt is down lah! :P

iwonder      ( Date: 15-Apr-2010 17:22) Posted: A wise call indeed.!   jke6312      ( Date: 15-Apr-2010 17:02) Posted: this counter has gone up from 1.25 on 30 Mar to 1.84 yesterday....sure will come down...do not rush in to buy...the sky is not the limit

 

A wise call indeed.!  

jke6312      ( Date: 15-Apr-2010 17:02) Posted: this counter has gone up from 1.25 on 30 Mar to 1.84 yesterday....sure will come down...do not rush in to buy...the sky is not the limit

 

this counter has gone up from 1.25 on 30 Mar to 1.84 yesterday....sure will come down...do not rush in to buy...the sky is not the limit

 

Haha .....the ship had turn back for u to board lah...

iwonder      ( Date: 15-Apr-2010 14:33) Posted: You are right......but I missed the 1.75 train ...have to get onboard at 1.77........waiting for first target at $2.00 pharoah88      ( Date: 15-Apr-2010 11:40) Posted: S$1.75  CHERRIES EXCELLENT  PICKINGS

 

You are right......but I missed the 1.75 train ...have to get onboard at 1.77........waiting for first target at $2.00

pharoah88      ( Date: 15-Apr-2010 11:40) Posted: S$1.75  CHERRIES EXCELLENT  PICKINGS

 

NEWS today Thursday April 15, 2010 page 2

Growth forecast conservative: Analysts

They project 7.5% to 9.5% growth, optimistic about wages and jobs

Millet Enriquez

emelita@mediacorp.com.sg

SINGAPORE

On-year gross domestic product (GDP) growth of 13.1 per cent was the highest in 16 years, and with such a spectacular showing coming out of last year’s recession, analysts believe the economy can hit 8-percent growth for the full year — even if the rest of the quarters record disappointing growth.

Some felt the Government’s latest revised forecast was still too conservative. IMR Robert Prior-Wandesforde, senior Asian economist with HSBC in Singapore, said growth could average 9.1 per cent; Mr David Cohen, Action Economics’ director of economic forecasting for Asia, cited 9.5 per cent.

The strong showing will also translate into more jobs and lead unemployment levels to fall to below the 2 per cent level, resulting in technical “full employment” this year, the private sector economists said.

The services sector, which accounts for about 68 per cent of total employment here, is expected to be the main beneficiary. OCBC Bank’s head of Treasury Research and Strategy Unit, Ms Selena Ling, said: “With the integrated resorts coming onstream, demand for tourism-related manpower is expected to increase significantly.”

She also expects companies to adjust wages and bonuses to reflect the improved economic conditions, estimating nominal wage growth to be about 4 per cent on-year.

Better job prospects are already apparent in the manufacturing sector, the economy’s star performer with 139 per cent on-quarter growth in the first three months. Mr Renny Yeo, president of the Singapore Manufacturers’ Federation, said some of its members are already hiring but cautioned the spree could be curbed by the rising labour costs and the Government’s plans to tighten its foreign worker levy policy.

Still, analysts reckon the spectacular growth in the manufacturing sector, which was supported by the biomedical and electronics sector, may not be sustainable. “At some stage, the restocking momentum will also start to fade off,” said Mr Kit Wei Zheng, economist at Citigroup.

DBS economist Irvin Seah agreed and said he expects a pullback in the pharmaceutical sector due to the industry’s volatile nature.

Going forward, the services sector will likely become the economy’s new star performer as it is poised for record growth, economists said.

“Export orientated industries will also continue to benefit from the extremely strong and, in my view, sustainable recovery in the regional trade cycle,” said HSBC’s Prior Wandesforde.— After the first quarter’s stunning performance, private sector economists are now revising their growth forecast up for the year to between 7.5 per cent and 9.5 per cent, a tad higher than the Government’s revised projections announced yesterday.

 

TEMASEK

MAJOR

SHAREHOLDER

pharoah88      ( Date: 13-Apr-2010 10:43) Posted: pharoah88      ( Date: 13-Apr-2010 10:39) Posted: COSCO GOVERNANCE SAFEGUARDED

 

what is the Total  number of shares  held by TEMASEK ?

sEEms  LiKE  TEMASEK  WiLL  appointment a 

DiRECTOR  On  COSCO  BOARD

iwonder      ( Date: 14-Apr-2010 22:09) Posted: Just to update on this counter: Temasek annouced today that they have accumulated another 1.4 mil shares on 9 April 2010, on the back of earlier purchase on 8 April 2010. pharoah88      ( Date: 14-Apr-2010 17:21) Posted:   S$2.12

 

S$1.75  CHERRIES

EXCELLENT  PICKINGS

 

THANKS

iwonder      ( Date: 14-Apr-2010 22:09) Posted: Just to update on this counter: Temasek annouced today that they have accumulated another 1.4 mil shares on 9 April 2010, on the back of earlier purchase on 8 April 2010. pharoah88      ( Date: 14-Apr-2010 17:21) Posted:   S$2.12

 

STI lose steam, margin gain now ard 7.25, dropping fr high of 18.23 early trading.

Ha ha, must use something to knock my head liao. At kopitiam, broker quietly mentioned ds burger week plus ago, while its px was ard 1.35. As I hv dumpped my Yzjiang earlier, hence no confi to acq ds burger, instead buying Innotek. Liao Chou ah.

Am wanted to chase DBS at 15.60 pre-Q. Heng ah, near miss at 15.62. Later withdraw loh, not cheap counter, run road.

 

is this my SHORT signal ? hee.... :P

 

Losing momentum .... at 1.77 now...

 

Just to update on this counter: Temasek annouced today that they have accumulated another 1.4 mil shares on 9 April 2010, on the back of earlier purchase on 8 April 2010.

pharoah88      ( Date: 14-Apr-2010 17:21) Posted:   S$2.12