DJ MARKET TALK: Daiwa Starts Cosco Corp. At Underperform,Target S$1.00
0057 GMT [Dow Jones] STOCK CALL: Daiwa initiates Cosco Corp. (F83.SG) at Underperform with a S$1.00 target price. "We believe Cosco Corp Singapore's premium to its peers over the past three years is no longer justified, due to: its exposure to bulk shipping, and the operating profit-margin contraction trend," the house says. It expects Cosco's share price to derate from its above-average and higher-than-peers' P/E. It notes the shipbuilder's operating-profit margin has been falling since it started on new offshore rig-building projects; "this trend was confirmed in the 2Q11 results." It adds, Cosco's exposure to bulk shipping is negative given the current oversupply of ships and weak demand due to the global economic slowdown. "Notwithstanding the about 70% fall in the share price since the company announced worse-than-expected 2Q11 results (Aug. 1), we expect further share-price downside from further negative margin surprises." The house prefers Keppel (BN4.SG), rated Outperform, for "its better operational efficiency, earnings outlook, and attractive valuations." Cosco shares closed down 1.8% at S$1.11 Tuesday. (matthew.allen@dowjones.com)
Note : Cosco share price and Daiwa's target price is fast approaching our unwavering 90c call made on 10 Aug 2011 ...( despite the recent sharp general market rebound with Buffet bullish prompting and cosco analysts' consensus target calls above $1.20 ) see http://sgxswinger.blogspot.com/2011/08/cosco-70c-here-we-come.html
0057 GMT [Dow Jones] STOCK CALL: Daiwa initiates Cosco Corp. (F83.SG) at Underperform with a S$1.00 target price. "We believe Cosco Corp Singapore's premium to its peers over the past three years is no longer justified, due to: its exposure to bulk shipping, and the operating profit-margin contraction trend," the house says. It expects Cosco's share price to derate from its above-average and higher-than-peers' P/E. It notes the shipbuilder's operating-profit margin has been falling since it started on new offshore rig-building projects; "this trend was confirmed in the 2Q11 results." It adds, Cosco's exposure to bulk shipping is negative given the current oversupply of ships and weak demand due to the global economic slowdown. "Notwithstanding the about 70% fall in the share price since the company announced worse-than-expected 2Q11 results (Aug. 1), we expect further share-price downside from further negative margin surprises." The house prefers Keppel (BN4.SG), rated Outperform, for "its better operational efficiency, earnings outlook, and attractive valuations." Cosco shares closed down 1.8% at S$1.11 Tuesday. (matthew.allen@dowjones.com)
Note : Cosco share price and Daiwa's target price is fast approaching our unwavering 90c call made on 10 Aug 2011 ...( despite the recent sharp general market rebound with Buffet bullish prompting and cosco analysts' consensus target calls above $1.20 ) see http://sgxswinger.blogspot.com/2011/08/cosco-70c-here-we-come.html
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