Cosco Singapore higher on new shipbuilding orders, analyst upgrades

Cosco Singapore higher on new shipbuilding orders, analyst upgrades

10/25/2007 10:22:00 AM

SINGAPORE (Thomson Financial) - Shares of Cosco Corp Singapore, a shipping company that owns a shipyard in China, rebounded Thursday after announcing it secured an order to build 29 bulk carriers worth 1.34 billion US dollars.

At 10.05 am (0205 GMT), Cosco was up 45 cents or 6.48 percent at 7.40 Singapore dollars with 11.1 million shares traded.

The news has provided the stock a much needed shot in the arm as investors have been selling the stock in the last two days on concerns its shareholder, shipyard operator SembCorp Marine Ltd, may sell more shares in the company.

SembCorp Marine said Tuesday it had sold 39 million Cosco shares, takeing its holding to 111.4 million shares.

The latest orders put Cosco's current order book at 6.4 billion US dollars, 6.2 billion dollars of which were secured this year, according to Kim Eng Securities.

The brokerage believes Cosco could secure another 900 million dollars in orders based on existing options with customers. It has lifted its target price for Cosco to 8.10 Singapore dollars a share from 7.50 dollars previously.

DBS Vickers Securities said it has also lifted its target price for Cosco to 9 dollars a share from 6.10 dollars.

Following the new orders, DBS said it has raised its 2008 net profit forecast by 10 percent to 499.8 million dollars and its 2009 net profit forecast by 10 percent to 725.1 million dollars. For 2007, DBS expects Cosco to achieve a net profit of 296.2 million dollars, compared with 205.5 million dollars in 2006.

Merrill Lynch also raised its target price for Cosco to 9.15 dollars a share from 5.9 dollars previously, while Citigroup pegged its target price at 9.30 dollars.

(1 US dollar = 1.46 Singapore dollars)
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