DJ MARKET TALK: BNPP Starts Cosco Corp. At Reduce; S$1.54 Target

DJ MARKET TALK: BNPP Starts Cosco Corp. At Reduce; S$1.54 Target  0331 GMT [Dow Jones] STOCK CALL: BNP Paribas starts Cosco Corp. (F83.SG) at Reduce with a S$1.54 target. It says interviews with Cosco's Korea, Hong Kong, and China peers suggest "the bulk carrier shipbuilding industry is likely to suffer the biggest hit from 2012-2013" due to a mix of reasons, including further capex cuts by shipping companies, capacity over-supply for both shippers and yards, and potential poor margins on orders received in 2010-2011. The house adds, "the market-anticipated asset injection from the parent company is unlikely in the foreseeable future, according to management." BNPP sees two trends emerging in 2012: "smaller operators under-quoting new bids to keep the cash flow and yards running, and order cancellations/postponements in case the potential supply glut is worse than expected." The house says its 2012-2013 forecasts are about 20% below consensus "and we expect significant earnings downgrades when consensus starts to realize the severity of collateral damage from the lower-price orders, CNY appreciation, and inflationary cost pressures." Shares are up 1.0% at S$1.94. (matthew.allen@dowjones.com)