COSCO is the only S-chip above $1.00

Dongdaemun
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15 years 6 months ago - 15 years 6 months ago #552 by Dongdaemun

Replied by Dongdaemun on topic Re:COSCO is the only S-chip above $1.00

poor Yangzijiang, kena \'sell\' by Deutsche even at this low low price of 3x next year\'s earnings> While we think highly of YangzijiangÃ¢â¬â¢s (YZJ) capabilities and operational track record, we are cautious about the shipbuilding industry and believe the headwinds are numerous. While management believes the companyÃ¢â¬â¢s reputation and sizeable order book support its growth and earnings visibility, we think these positives are largely discounted in the price. Execution risks relating to its existing contracts remain considering the compressed delivery dates over the coming years (versus its comfortable delivery experience over the past decades). A key risk is how the shipbuilding industry would evolve in light of the large number of vessels planned for delivery in 2010/11 and the large capacity expansion plans by most shipyards in China and Korea. We believe that similar strategies adopted by most yards across the region could eventually lead to severe competition within the sector as shipyards compete to fill their expanded facilities. We recommend taking a cautious stance on the sector and avoiding pure play shipbuilders in light of the numerous industry risks. We initiate coverage of YZJ with Sell and a target price of S$0.21. Chinese yards have moved towards 1x P/B or less, and we expect YZJ to trend lower as the industry problems intensify. While the group is currently trading at 3.4x FY09E PER, a level some may find attractive, we expect earnings to plunge in 2012 once the current orders are delivered. Key counter-arguments to our bearish case on Yangzijiang are: Ã´â¬ââ Lower-than-expected steel price increases: If ship plate prices decrease, it would have a positive impact to group earnings. Ã´â¬ââ Greater-than-expected new order wins: Any unexpected vessel order wins could have positive implications for group earnings Ã´â¬ââ Better-than-expected project execution: Smooth construction of the multiple orders on hand would be positive for profit margins Ã´â¬ââ Less-than-expected difficulty in customers obtaining financing: Any easing up of the credit markets may allow financing to be secured by customers for current orders Ã´â¬ââ No overbuild of shipyard capacity in China and Korea: The failure of yards may lower the potential overbuild of capacity

Last edit: 15 years 6 months ago by Dongdaemun.

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MacGyver
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15 years 6 months ago #557 by MacGyver

Replied by MacGyver on topic Re:COSCO is the only S-chip above $1.00

I remember just 12 months back, COSCO was called the \"Father of S-Chip\" while FerroChina was called the \"Mother of S-chip\". Looks like both parents are whacked pretty hard. The children are like orphans now.

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MacGyver
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15 years 6 months ago #558 by MacGyver

Replied by MacGyver on topic Re:COSCO is the only S-chip above $1.00

Harlequin; Days of the shipbuilders are gone. Investors are selling down these type of stocks faster than you can said \"Market Siao Liao\" Heard that there is a shipbuilding IPO by UOB Asia, called Otto Marine. Not sure how the interests for the ipo....

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Mel
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15 years 4 months ago #792 by Mel

Replied by Mel on topic Re:COSCO is the only S-chip above $1.00

dec 5: (XFN-ASIA) - Citigroup said it is maintaining its \"hold/high risk\" > rating on Singapore-listed Cosco Corp as well as a target price of > 0.85 sgd as the company faces potential weakness in its two core > businesses - building ships and offshore oil rigs. > In the next one to two years, Citi said it sees several factors > that could impede the company\'s growth, including lower-than-expected > orders and potential cancellations, a fall in the Baltic Dry Index and > possible shipbuilding contract delivery delays. > In addition, it said a sharp decline in oil prices may affect > demand for new offshore oil rigs or offshore conversions. > However, Citi noted the stock likely has already priced in the > negative factors. > Cosco was down 0.005 sgd or 0.6 pct at 0.870 sgd in heavy early > trading. > (1 usd = 1.53 sgd) > shburo@xfn.com[1] >

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