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Cosco is now going on a spree to capture its share (large share) of Offshore market. They are now affecting Sembcorp Marine, Vard and others. Once they have a large share of the Offshore market, soon Cosco order book is 14billion instead of Sembcorp Marine. At the moment Cosco is successfully achieving it without having lossess unlike Vard yard in Brazil which price is too low that Brazillian workers and subcontractors are not willing to work and Vietnam yard which could not get orders.
CIMB says So What? - Once Cosco has large share of Offshore order book, they have much opportunity to further improve its profit margin, improve its design and anchor itself to be the prime Offshore structures manufacturer. Quantity brings economy of scale, experience and improvement in mass production. Like America has improved its Shipbuilding due to WWII constructing the Liberty Ship, turnover 7 days pership. CIMB expect Cosco to get 2billion orders for 2013, now Cosco Singapore order book to date 2013 is about 2billion already.
So what is it for a Investor. - once order book ramp up, profit although tight margin will also increase in multiplication
pasttime ( Date: 02-Aug-2013 13:50) Posted:
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always got different view, estimate of profit and number of x pe to pay. that is why got sellers got buyers ma.
one point not commonly talk about is the residual value of these yards. they own land facing sea which can be converted to house when they do not need the yard any more.
for now those yard with lots of money standby, able to innovate for more fuel efficient, larger size ship, will probably survive. after that competition should return to normal with many weaker yards gone.
Analyst play by the Event and comment according to event. Since when you make money from following Analyst report? Why dont you check CIMB report issued in 2009 about Cosco and many others before Cosco went shooting up.
Well leave it to you, we are just sharing for the benefit of all investors.
WanSiTong ( Date: 02-Aug-2013 11:54) Posted:
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You can find the answers from CIMB report.
ruanlai ( Date: 02-Aug-2013 11:40) Posted:
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COSCO now is trading at 72.5 ......78cents......
YZJ now clearing up 94cents.........
COSCO is more profitable with huge contract coming on the way.......
YZJ got nothing and contracts been cancelling.......
DO NOT UNDERSTAND where are the point of view from the INVESTORS.......
TAO NAO PAI
https://brokingrfs.cimb.com/WQyEgvRH4giVbOFV1u5WzEfscobkhtrh980xvMh2usHrc1oM8ZASlEGBbzXtpQnUDvESpclOy6Q1.pdf
WanSiTong ( Date: 02-Aug-2013 11:38) Posted:
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CIMB TP : 0.46
The great famine
We were spot on with2Q13 net profit of S$12m, although this was helped by S$2.4m tax income, without which, it would have been an ugly set of results.We expect a consensus downgrade of earnings and target prices as Cosco continuesto disappoint.
* Offshore contributes, shipbuilding at an end
* Declining margin outlook
* Contract wins, so what?
https://brokingrfs.cimb.com/WQyEgvRH4giVbOFV1u5WzEfscobkhtrh980xvMh2usHrc1oM8ZASlEGBbzXtpQnUDvESpclOy6Q1.pdf
Cosco Corporation: FULLY VALUED S$0.745 Bloomberg: COS SP
Hit by forex loss
Price Target : 12-month S$ 0.75
By: HO Pei Hwa +65 6398 7968
• 2Q13 below due to forex loss
• Secured US$270m new contracts
• Concerns over execution of diversified vessel types and competitive pricing
• Maintain FULLY VALUED, S$0.75 TP
2Q below. Cosco’s 2Q13 net profit grew 24% q-o-q to S$12m, but fell short of our expectations of S$15-20m due to forex loss of S$10.2m Overall gross margin held up at 10.8%, attributable to Cosco's improved efficiency and lower steel cost, offsetting the lower newbuild prices. Shipbuilding and rigbuilding margins are hovering at 7-9% while repair and conversion jobs have returned higher margins of 15%. 1H13 earnings only make up 35% of our initial full year estimate.
Under pressure to fill yard capacity. Including the jack up and PSV orders announced together with the results, Cosco has secured orders of US$1.2bn YTD, forming 60% of our order win assumption of US$2bn. Upstream reported in early June that Cosco is signing contracts for two drillships worth US$650-700m each with X-Drill. If this materialises, Cosco would beat consensus' order win assumptions for this year. Cosco remains under pressure to fill up yard capacity in view of its dwindling orderbook. While its key offshore hub, Nantong yard has scaled up over the years, both Zhousan and Dalian yards, which were engaged largely in the construction of dry bulk vessels, face higher execution risk as they diversify into other vessel types in view of lackluster merchant ship orders.
Low earnings visibility. We have lowered our below consensus FY13F earnings by a further 12% to account for the forex loss. Our TP of S$0.75 is unchanged as we pegged the valuation to 1.3x FY13 P/BV, against its low ROE of 5%. Maintain FULLY VALUED. We believe the low economies of scale, weak shipping market and intense competition will continue to be a drag on earnings over the next 2 years.
Have you all paged Bro Ace333 !!?
Peter_Pan ( Date: 02-Aug-2013 09:22) Posted:
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CIMB maintains U/p with $0.46 TP CS maintains U/p with $0.60 TP Deutsche maintains Hold with $0.83 TP
UNDERPERFORM - TP S$0.46 - CIMB
SELL - TP $0.60 - OCBC Research
wow $0.65 looks real delicious......
Peter_Pan ( Date: 02-Aug-2013 09:13) Posted:
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Maintain Sell, TP $0.65 - Maybank Kim Eng
good chance to load more...rewards will come next year :)
Not yet, going to dump in. At the moment still spread with NOL, Yzj and Cosco for shipping.
Cosco looks repeat 2008 2009 path which means 200% profit next year for year after.
WanSiTong ( Date: 02-Aug-2013 08:49) Posted:
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SELL at Rumours Buy at NEWS
BBs sell COSCO due to the results are bad
BBs will buy COSCO when results are improved and moving forward for better futures and huge contracts won.................
You must be heavily vested in this counter! LOL
Hawkeye ( Date: 01-Aug-2013 23:57) Posted:
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Within expectation. Next year you see the rise in profit.
It is better than Vard who is loosing and expect its Yard in Vietnam and Brazil to eat it alive. Yangzijiang good profit but not enough orders. So Cosco still the cheapest good Shipping counter and Cosco had not failed as expected.
WanSiTong ( Date: 01-Aug-2013 23:10) Posted:
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Net profit after Tax for 2nd qtr ended 30/6/13 dropped 61% ( from $48.5m same period last yr to $18.9m)
Net profit after Tax for 1st half ended 30/6/13 dropped 64% (from $94.9m same period last yr to $34.4m)
Overall, the Group continues to expect even more difficult and challenging business and operating conditions in 2013.