Company Name: COSCO CORPORATION (S) LTD
| Research House: Daiwa | Price Call: SELL | Target Price: 0.76 |
Cosco Corp.’s results were below expectations, Daiwa says, noting 3Q12 net profit was $27 million, down 17.5% on-year with a large on-year interest-expense increase taking the shine off gross profit growth from marine-engineering projects.
“This implies that the company is funding its customers’ working capital and this situation is likely to remain a drag on the company’s profit margins for the next 1-2 years as these orders are worked through.”
It notes 9M12 EPS of $0.0366 is about 70% of its previous 2012 forecast. It cuts its 2013-14 EPS forecasts by 8%-17% after lowering its 2012 order-book assumption by US$300 million to US$2.2 billion ($367 million to $2.7 million), marking-to-market its BDI assumption for Cosco’s dry-bulk shipping segment for 2012 and lowering its 2013-14 assumptions as well as raising its 2012-14 interest-expense assumptions. It notes its 2013-14 EPS forecasts are below consensus. It cuts its target to $0.76 from $0.83.
“While the company has had a reasonably successful year in garnering $1.98 billion worth of orders, roughly half of these are in the offshore marine segment, of which the company is still learning the ropes,” it says. It keeps an Underperform call, expecting more analyst earnings downgrades ahead. The stock is flat at $0.88.
No comments:
Post a Comment