Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD
Research House: Citigroup
Company Name: COSCO CORPORATION (S) LTD
Research House: Citigroup
Citi has raised its target price on Cosco Corporation (COSC.SI), a Singapore-listed Chinese shipbuilder, to $3.00 from $2.55 and maintained its buy rating.
Cosco said last month its subsidiary had signed a letter of intent to build two rigs worth US$1.05 billion ($1.32 billion) for Norway’s Sevan Group (SEVAN.OL). Sevan also has the option to order two more rigs at the same price.
Cosco said last month its subsidiary had signed a letter of intent to build two rigs worth US$1.05 billion ($1.32 billion) for Norway’s Sevan Group (SEVAN.OL). Sevan also has the option to order two more rigs at the same price.
Cosco is likely to make a full transition from a shipmaker to a rigbuilder in 2011, Citi said, adding that it sees accelerating wins in floating, production, storage and offloading (FPSO) vessels and rigs.
The brokerage said the shift in business mix will result in better margin resilience compared with shipbuilding, since offshore and marine wins should account for more than 80% of new orders in 2011, versus around 20% in 2007.
Cosco is also likely to benefit from order spill-overs and grow market share as Singapore and South Korean yards are getting more filled, Citi said, adding that the contract value may rise with the expansion from fabrication to full turnkey projects.
At 11:16 a.m., Cosco shares were up 0.9% at $2.26 on a volume of 6.7 million shares.
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