Wednesday, December 11, 2013

Cosco Corporation : Retail stock? (CIMB)

Cosco Corporation
Current S$0.73
Target S$0.47
Retail stock?

We doubt that any institutional investors would get excited over Cosco’s impressive order wins of US$3bn YTD, as these may not translate into higher profitability given its patchy execution record.

After five consecutive quarters of provision write-backs, which offered hope that its operations might stabilise, Cosco‟s recent provision of S$49.7m in 3Q13 reminded us that redemption could still be a long way off. De-rating catalysts are expected from persistently weak execution. Under our new rating structure, our rating changes from Underperform to Reduce. Our target price remains based on 22x CY15 P/E (five-year mean).


Competitive bidding
Cosco has secured orders of about US$3bn YTD, with its order book climbing to about US$7.9bn from US$6.7bn in 2Q13. Although this momentum is encouraging, we are uncertain whether the contracts would be profitable as most of its offshore contracts are priced at 20% discounts to the rates commanded by its Singapore peers. For instance, its latest jack-up rig order secured in Oct 13 was priced at US$180m vs. Singapore‟s average rig price of US$220m.

Drillship overhang
We believe that Cosco‟s 4Q results could be uglier, owing to a potential reversal of profits from the cancellation of a drillship order by a customer. The cancellation is now under arbitration and Cosco is still unable to quantify the financial impact. However, we believe that the profits booked earlier for this drillship could be reversed in 4Q, in line with conservative accounting standards. Upside risks to our view include a successful sale of the drillship. The unit is undergoing sea trials and Cosco says it has received several enquiries for the vessel.

No reason to own the stock
We recommend investors to reduce their positions in the stock in view of the negative triggers expected in 4Q. While the company may „buy‟ contracts by lowering profitability, that would not buy it any favours from the market.




Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 29/11/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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