Cosco Corp has broken below key 0.855 support level that it has held above since the whole of 2012 to last Friday. Today’s sharp drop is mainly due to weaker than expected results announced and a flurry of Sell calls from analysts. Technically, support has now turned resistance at 0.85 level. As long as 0.85 remains as a resistance level and Cosco does not go above it, still bearish in the short to midterm. Next support at 0.800. A break below this 0.800 can see it go lower further probably to test 0.700 level. Will increase short positions on this break of 0.800 psychological support level. Note that the low in Oct 2008 after the global financial crisis is at 0.625 level.
Buy stop at 0.86.
OCBC: Cosco Corp (S’pore): Downgrade to SELL - missed expectations
Summary: COSCO Corp (S’pore)’s 1Q13 revenue and net profit attributable to shareholders came in at S$733m (-25% YoY) and S$9.7m (-65% YoY) respectively. Turnover from shipyard operations, consisting of ship repair and shipbuilding, decreased by 26% YoY to S$719m in 1Q13 (1Q12: S$966m), while turnover for dry bulk shipping and other businesses increased by 8% YoY to S$13.8m (1Q12: S$12.8m). All in all, 1Q13 performance was disappointing with PATMI forming only about 9-10% of ours and consensus’ FY13F estimates. We now cut our FY13F-14F PATMI estimates by 50-60% and pare our fair value estimates to S$0.76 (previously S$0.90) on 1.3x P/B. We expect the street to do the same. Downgrade from Hold to SELL
Summary: COSCO Corp (S’pore)’s 1Q13 revenue and net profit attributable to shareholders came in at S$733m (-25% YoY) and S$9.7m (-65% YoY) respectively. Turnover from shipyard operations, consisting of ship repair and shipbuilding, decreased by 26% YoY to S$719m in 1Q13 (1Q12: S$966m), while turnover for dry bulk shipping and other businesses increased by 8% YoY to S$13.8m (1Q12: S$12.8m). All in all, 1Q13 performance was disappointing with PATMI forming only about 9-10% of ours and consensus’ FY13F estimates. We now cut our FY13F-14F PATMI estimates by 50-60% and pare our fair value estimates to S$0.76 (previously S$0.90) on 1.3x P/B. We expect the street to do the same. Downgrade from Hold to SELL
Maybank KE: Cosco Corp: Big Earnings Miss; Maintain SELL, TP $0.73
Ø Reiterate SELL, TP of SGD0.73 pegged to 1.3x trough P/BV. A disastrous set of 1Q13 results with revenue of SGD733.0m (-25% YoY, -13% QoQ) and PATMI of SGD9.7m (-65% YoY, -59% QoQ). Net profit made up only 9% of our and 10% of consensus’ full-year forecast.Ø Cosco expects margins to contract further into the subsequent quarters due to lower-price contracts in its orderbook, rising labour cost and appreciating Chinese Yuan. Net orderbook stood at USD6.4b with only USD254m of orders secured YTD.Ø We slash our FY13-14F earnings forecasts by 33-43% on the weak 1Q13 results and expect similar aggressive earnings cuts by consensus. Valuation is too rich at current levels given its declining profits and weak execution.
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