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. These contracts will raise Cosco Corp?s 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). 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,