Company Name: COSCO CORPORATION (S) LTD
| Research House: DBS Vickers | Price Call: SELL | Target Price: 0.80 |
DBS Vickers cut its target price for shipbuilder Cosco Corp (Singapore) to $0.80 from $0.88 and kept its ‘fully valued’ rating, citing sluggish shipbuilding orders until 2014 and growing competition in the offshore space.
Cosco shares were unchanged at $0.88 by 10:58 a.m. They have gained 0.6% since the start of the year, compared with a 23% rise in the FTSE ST Industrials Index.
Cosco posted on Friday a 17% fall in its third-quarter net profit at $26.6 million, and said it expects difficult operating conditions for the rest of the year.
DBS trimmed its 2012 net profit estimates for Cosco by 8.7% to account for lower income from scrap materials and higher interest expenses. It also cut its 2013 net profit forecast by 24.3% to reflect lower order win assumption of US$2.5 billion ($3.1 billion), compared with US$3 billion previous.
Cosco faces pressure to replenish its shipbuilding order book as existing orders for 35 vessels will be delivered by the end of 2013, but new orders are few given a bleak outlook in the shipping sector.
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