Cosco Corp full-year 2013 net profit falls 71% to $30.6mil

Chinese shipbuilder Cosco Corp (Singapore) on Monday reported a 71% fall in full-year 2013 net profit, due to lower profit contributions from ship building and marine engineering segments.

CoscoCorp, a subsidiary of state-owned maritime industry giant China Ocean Shipping (Group) Co , said its full-year net profit stood at $30.6 million, below the Thomson Reuters SmartEstimate of $43.78 million.

The company did not state its fourth-quarter results. In the first nine months of the year, its net profit slumped 68% to $26 million.

The shipbuilder said its order book was at US$7.8 billion ($9.9 billion), up from US$7.2 billion a quarter earlier.

Dec 13: Keppel REIT, TTJ, SingTel

Shares in Singapore recovered from earlier losses to end flat on Thursday, on expectations that the US Federal Reserve may reduce its stimulus programme soon. The Straits Times Index declined 0.06 per cent, or 1.70 points, to end at 3,059.04. Here are some stocks and factors that could affect the market this Friday morning:

SingTel’s mio TV has been slapped with yet another record-breaking fine -- a $220,000 one for an island-wide service disruption on May 15. The disruption, which lasted nine hours, affected around 26,000 Mio TV subscribers across various parts of Singapore, the Media Development Authority of Singapore (MDA) said on Thursday. This disruption coincided with a crucial English Premier League match between Arsenal and Wigan.

TTJ has reported 45% higher earnings of $4.9 million for the quarter ended 31 October 2013 (1QFY2014) compared to $3.2 million a year ago (1QFY2013) as profitability improved with gross profit margin rising from 14.4% in 1QFY2013 to 25.3% in 1QFY2014. Revenue in fact declined 26% to $32.1 million from $43.2 mainly due to lower sales recorded in the structural steel business.

Keppel REIT says both the office and newly completed retail space at Ocean Financial Centre are fully committed. With this, all of Keppel REIT’s five Singapore properties are now 100% occupied, up from its Singapore portfolio average occupancy of 99.5% as at end-September 2013. This is also higher than the average Singapore CBD occupancy of 93.5% for the third quarter of 2013.

KSH Holdings’ wholly-owned subsidiary, Kim Seng Heng Engineering Construction (Pte), has won a $42.5 million construction contract by United World College of South East Asia. Under the contract, the group will carry out work on the proposed addition of 1 block of five-storey building with other ancillary works to the existing UWCSEA campus at 1207 Dover Road Singapore 139654. Construction is expected to commence in December 2013, with completion expected within 20 months.

Sheng Siong Group’s wholly-owned subsidiary, Sheng Siong Supermarket Pte Ltd, has been granted an option to purchase the commercial premises situated at Block 71 Kallang Bahru #01-531 Singapore 330071 for a consideration of $13.5 million. The Property has a floor area of 779 square metres and is located within a two storey shopping complex. The remaining leasehold tenure of the property is 60 years. The property is intended to be acquired subject to an existing tenancy which expires on 24 October 2014. The group intends to occupy and use the Property for the operation of a supermarket following the expiry of the existing tenancy which expires on 24 October 2014.

Cosco Corporation (Singapore) said that Cosco (Guangdong) Shipyard Co., a subsidiary of the company’s 51% owned Cosco Shipyard Group Co., has delivered a 4,500 sqm livestock carrier Ganado Express to its European buyer. The delivery documents were signed by and between Cosco Guangdong and the buyer recently. The livestock carrier measures 134.8 meters in length of all, 19.6 meters in breadth and 9.6 meters in depth.

Oct 1: Property stocks, Cosco, Olam

Singapore share prices ended 1.32% lower on Monday as concerns of a likely shutdown of the US government plagued global markets. The blue-chip Straits Times Index (STI) closed 42.31 points lower at 3,167.87. Here are some factors and company news that could affect the market this Tuesday morning:

Prices of small completed private apartments and condos in Singapore rose for the second consecutive month in August, according to the latest flash estimates from the National University of Singapore (NUS).

Civil servants in Singapore will have to declare visits to the city-state's two casinos under new rules intended to prevent incidents such as the recent case of a senior official from the anti-corruption watchdog charged with misappropriating money.

Cosco Corp (Singapore) said that Li Yun Peng will replace Ma Ze Hua as chairman of the Singapore-listed Chinese shipbuilder.

Electricity tariffs will increase by an average of 0.5% or 0.12 cents per kWh for the period from Oct 1 to Dec 31, 2013, SP Services Limited said.

Olam processing, a division of Singapore-based Olam, joined a list of companies with a licence to export cocoa products from top grower Ivory Coast for the 2013/2014 season due to start next week.

From Jan 2 next year, firms will have to check the Do Not Call (DNC) registry before sending telemarketing messages to consumers with Singapore telephone numbers, the Personal Data Protection Commission said on Monday.

Jun 24: Pacific Andes Resources, First Resources, Golden Agri

Shares in Singapore closed weaker on Friday. The Straits Times Index fell 8.81 points, or 0.28%, to 3,124.45. Here are some stocks to watch this Monday morning:

Fish producers Pacific Andes Resources and its indirectly owned listed unit, China Fishery, requested trading halts pending announcements. China Fishery said in May it was planning to buy shares of Peruvian fish feed firm Copeinca. Norwegian fish farmer Cermaq, which holds about 20% Copeinca’s shares, said it would not accept an offer for the stake from China Fishery.

Singapore-listed palm oil producer First Resources said on Sunday that inferences from various media reports that the company or its subsidiaries are contributing to the haze through irresponsible burning are inaccurate. It added that it adopts a strict "zero-burn" policy and deploys mechanical methods in its land clearing process.

Singapore-listed palm oil producer Golden Agri-Resources said on Saturday there were no hotspots or fires in the concessions of the company and its subsidiary, PT Sinar Mas Agro Resources and Technology Tbk.

Singapore-listed Chinese shipbuilder Cosco Corp said it had secured contracts for two accommodation units valued at over US$170 million each.

May 22: DBS, Japan Foods, Boustead

Stocks in Singapore closed 0.3% lower on Tuesday on profit-taking. The Straits Times Index fell 10.33 points to end at 3,443.90.Here are some stocks to watch this Wednesday morning:

Indonesia on Tuesday approved the purchase by Singapore's DBS of a 40% stake in Bank Danamon, but demanded the city-state open up its financial sector before any full takeover.

Japan Foods has entered a joint venture with Ajisen Investments Ltd to develop its Japanese restaurant business in China. Japan Foods will hold 20% of the venture and Ajisen will own the rest.

Boustead Singapore, an infrastructure-related engineering services and geo-spatial technology group, posted a net profit of $27.7 million in its fourth quarter ended March 31, down 15% from the previous year. Profits were hurt by a fall in revenue from its water and wastewater engineering division.

Cosco Corp, a marine engineering and shipping group, has secured a contract valued at more than 500 million yuan ($102.6 million) from a Chinese ship owner to build a vessel, which is scheduled for delivery in the first quarter of 2015.

Offshore vessel builder Nam Cheong announced Leong Seng Keat, its executive director, has been re-designated as the chief executive officer.

China Fishery is considering increasing its offer price to above 59.70 Norwegian crowns ($12.93) per share for its bid for Peruvian fishmeal firm Copeinca.

CIMB cuts Cosco Corp to Underperform, cuts target 53%

CIMB downgrades Cosco Corp. (F83.SG) to Underperform from Neutral after 1Q13 core profit accounted for only 10% of the house's full-year forecast, coming in well below expectations on negative operating leverage and lower other income.

CIMB cuts its target to $0.46 from $0.98 after lowering FY13-15 EPS forecasts by 50%-53% on lower scrap sales and margins.

"Despite the dismal outlook, we believe that Cosco, as a state-owned firm, could be forced to keep its workforce and yards intact to sustain employment rather than making the required cuts to improve operational leverage," CIMB says. "We see no reason to own the stock with its sharp earnings declines and premium valuations."

The stock is down 4.6% at $0.83.
 

Singapore's Japan-exposed plays face yen impact: DBS Vickers

While Japan's reflation/recovery theme is positive for Singapore-listed companies exposed to Japan, it will be offset by the weaker yen's effect on earnings translated back to local currencies, DBS Vickers says.

The falling yen is positive for companies buying goods and services from Japan, such as Pan United (P52.SG), which buys cement, and Tat Hong (T03.SG) and Sin Heng (KF4.SG), which buy cranes, it says. But it adds, the weaker yen will be negative for companies competing with Japanese players, such as the China shipyards Yangzijiang (BS6.SG) and Cosco Corp. (F83.SG) as Japan's goods and services become more cost attractive. It also expects the falling yen to hurt companies which aren't likely to see demand for their products fluctuate much based on the Japan's economy, such as Biosensors (B20.SG).

Among trusts with both Japan asset and revenue exposure, such as Mapletree Logistics Trust (M44U.SG) and Saizen REIT (DZ8U.SG), the declining yen's short-term negative will be offset by medium-term asset-value reflation, it says. It notes GLP (MC0.SG) faces a negative earnings translation impact, while the negative earnings-translation impact on SATS' (S58.SG) Japanese catering unit could be partly offset by increased volumes if tourist arrivals increase.

Singapore shipbuilders up; Technical bounce: OSK

Singapore-listed shipbuilders Yangzijiang and Cosco are rallying.

“It’s just a technical bounce. I don’t see any change in the fundamentals of the industry right now,” says Jason Saw, an analyst at OSK Research. “It’s just a bit of a bounce from the bottom.”

YZJ is up 3.5% at $1.035 at 12:32 pm, but it remains down more than 25% from its year-to-date closing peak of $1.39, touched in March. Cosco is up 2.5% at $1.02, but is still down more than 22% from its $1.31 closing peak, touched in February.

Margin concerns on Cosco contract win: CIMB

CIMB is cautious over Cosco landing a US$170 million contract to build an offshore drilling rig, noting it’s about 11% cheaper than average prices for similar rigs Keppel secured in 2011.

It adds, Cosco’s offshore division was barely profitable with 9%-10% gross margins in 2Q12; “further downside is likely as an array of new products jack-up rigs, tender rigs, semi-sub accommodation rigs will be progressively executed at 9%-10% gross margins in 2012-2014, with the potential for execution hiccups and provision for cost overrun.”

Cosco’s shipbuilding outlook is also bleak as it exhausts the delivery of 39 bulk carriers by mid-2013, intensifying the need to refill its orderbook to cover the yards’ fixed costs. It notes Cosco doesn’t rule out bidding for zero-margin shipbuilding contracts to keep yards afloat.

The latest contract brings year-to-date wins to US$1.2 billion, within CIMB’s US$2 billion ($2.49 billion) target. It rates Cosco Underperform with $0.85 target, tipping sticking with Singapore rigbuilders for stronger orderbooks, proven track records and more attractive valuations.

Cosco is +1.5% at $1.005 at 3:08 pm.

Aug 2: OCBC, Cerebos, Cosco, Sembcorp

Singapore stocks may fall after the Federal Reserve refrained from committing itself to additional stimulus at a policy meeting yesterday.

Singapore shares closed higher on Wednesday with the benchmark Straits Times Index up 14.68 points to close at 3,051.08. Volume was 1.19 billion shares worth $1.01 billion. Gainers outnumbered losers 200 to 142.

Here are some stocks and factors to watch:

OCBC, Singapore's second-largest lender, posted a 12% rise in second-quarter net profit to $648 million, helped by strong loan growth and a surge in trading income.

Cerebos Pacific received a formal proposal to seek the voluntary delisting from Suntory Beverage & Food Asia. Suntory intends to acquire all the ordinary shares in the capital of the company for $6.60 apiece.

Cosco Corporation (Singapore) posted a 13% fall in earnings to $27.61 million for the second quarter ended June 30, 2012 from $31.86 million a year earlier due to lower profit contributions from its dry bulk shipping operations.

Sembcorp Industries has started operations in its newest and largest industrial wastewater treatment facility on Jurong Island. The $40 million facility will treat 9,600 cubic metres of wastewater a day, and serve chemical and petrochemical companies in the newly developed Banyan, Tembusu and Angsana districts of the island, said Sembcorp.

Fraser and Neave and its brewing affiliate Asia Pacific Breweries have requested trading halts in their shares on Thursday, pending the release of an announcement.

ComfortDelGro said its subsidiary plans to acquire Australian bus company Deane's Bus Lines Pty Ltd and Transborder Express for A$53 million ($69 million).

Excelpoint Technology reported a 34.2% decrease in earnings to US$939,000 for the fiscal second quarter ended June 30, 2012 from last year.

Smartflex Holdings and its subsidiary Smartflex Innovation have entered into a joint venture agreement with French engineering firm, SANsystems Sarl which designs and develops high-volume manufacturing solutions for smartcard applications.

CCM Group said that its wholly-owned subsidiary, CCM Industrial, has secured two contracts worth a total of $136.43 million.

CDW Holding said its subsidiary, CD Suzhou, is selling its Suzhou factory premises to the government of Mu Du town for 56.16 million yuan ($10.9 million).

Cambridge Industrial Trust (CIT) has entered into a facility agreement totalling $40 million with Standard Chartered Bank.

July 13: Ezra, IHH, Wee Hur, Straits Trading, Cosco, ST Engineering

Singapore stocks fell on Thursday with the benchmark Straits Times Index down 17.27 points to close at 2,972.04. Volume was 2.36 billion shares worth $1.01 billion. Losers outnumbered gainers 246 to 161.

Here are some stocks and factors to watch:

Ezra Holdings, the offshore contractor and provider of integrated offshore solutions, said it posted a 244% increase in earnings to US$22.4 million ($28.5 million) for the third quarter ended 31 May 2012 (3Q FY12). In separate press announcements, Ezra also said it won $209 million in contracts recently.

IHH Healthcare Bhd., Asia’s biggest hospital operator, raised 6.3 billion ringgit ($2.5 billion) in the world’s third-largest initial public offering this year, selling shares near the high end of a marketed range. IHH sold shares at 2.80 ringgit apiece in the Kuala Lumpur and Singapore IPO, the company said. Institutional investors sought more than 100 times the shares available to them, two people familiar with the matter said.

Wee Hur Holdings will launch its largest residential development to date on 21 July 2012. The development, Parc Centros will be a 618-unit condominium near Punggol MRT station and also the first condominium to offer five-bedroom apartments in the surrounding area of Punggol. The Temporary Occupancy Permit (TOP) is expected to be December 2016.

The Straits Trading Company has acquired 318���332 Flinders Street, Melbourne, Australia, for A$61 million ($79.3 million). The property, a historic hotel built in 1912, is currently leased and operated by the company’s wholly���owned subsidiary, Rendezvous Hotel (Australia) Pty under the hotel name, Rendezvous Grand Hotel Melbourne.

Cosco Corporation (Singapore) said that subsidiaries of the company’s 51% owned Cosco Shipyard Group Co. have made the deliveries of two bulk carriers. They are Ecofaith G.O. from Cosco (Dalian) Shipyard Co. delivered and Asian Champion from Cosco (Zhoushan) Shipyard Co.

ST Engineering’s aerospace arm ST Aerospace and AirAsia have signed a 10-year agreement worth US$80 million ($102 million). The contract involves component repair management Maintenance-By-the-Hour (MBHTM) support for 75 of AirAsia’s Airbus A320 aircraft, and is expected to commence immediately.

CapitaLand said its wholly owned subsidiaries had sold their entire 20.75% stake in United Malayan Land for about $62.6 million.
 
Singapore Exchange said it is offering SGX S&P CNX Nifty Options from July 16.

Yongnam Holdings said it had secured three new contracts worth a total of $63.8 million for structural steelworks and a specialist civil engineering contract.


 

Cosco says 4 shipbuilding contracts worth $133m made effective from Mar 15

Cosco Corporation (Singapore) says that four shipbuilding contracts signed by unit Cosco (Guangdong) Shipyard Co. with an American ship owner for the construction of four UT 771 CDL Platform Supply Vessels (PSVs) at a value of over US$105 million ($133 million) in total have become effective on March 15, 2012.

Delivery of the above four vessels is expected to start in early 2014. In addition, from March 15, the ship owner has the option to declare up to another six contracts for the construction of the same UT 771 CDL PSVs, which have a value of over US$160 million in total.

Dec 28: Cosco Corp, Hyflux, Midas Holdings, Fibrechem Technologies

Singapore shares may open lower on Wednesday, hurt by data that showed Japanese industrial output and household spending fell in November.

Singapore’s benchmark Straits Times Index <.FTSTI> dropped 0.11% on Tuesday to 2,673.62 points. Here are some stocks and factors to watch:

 

Chinese shipbuilder Cosco Corp on Tuesday announced a contract to convert a large crude carrier tanker to a floating production storage and offloading (FPSO) vessel that will be deployed off Brazil.

   

Hyflux said on Tuesday it had agreed to inject two water treatment plants in China to Galaxy NewSpring, a 50-50 joint venture between the company's subsidiary and Mitsui & Co, for US$41.2 million ($53.4 million).

 

Midas Holdings said on Tuesday it had won three new contracts worth a total of 142.2 million yuan ($29.2 million) to supply aluminium products for train cars in China and Brazil.

   

An independent investigation by NTan Corporate Advisory found a total of HK$777 million ($129.3 million) of unaccounted cash balance at Singapore-listed Fibrechem Technologies, as well as financial and accounting misstatements over an extended period of time, among other issues.

 

   

 

 

Cosco Corporation (S) rated 'hold' by Phillip Securities

Phillip Securities Research in an Oct 13 research report says: "Cosco Corp reported 2Q11 PATMI of $32 million (-53.4 % y-o-y) respectively. PATMI fell sharply mainly due to (1) lower profits from dry bulk shipping (2) lower margins from marine engineering projects and (3) higher tax expenses due to deferred tax benefit adjustments.

"Since the release of 2Q11 results, Cosco's share price has greatly underperformed the market. We arrive at our revised target price of 91 cents after lowering our P/E assignment to 14x FY12e EPS (from 15x previously) to reflect weaker sentiments in the shipbuilding sector.

"We also cut our EPS forecast for 2011e and 2012e to 7.2 cents and 6.6 cents respectively as we lower our expectations of future offshore order wins and margins for Cosco shipyard operations. MAINTAIN HOLD."

Cosco Corp (S) rated 'hold' by Phillip Securities

Phillip Securities Research in an Aug 2 research report says: "Cosco Corp reported 2Q11 revenue of $996 million (+3.5% y-o-y) and PATMI of $32 million (-53.4 % y-o-y) respectively.

"Revenue increased slightly but PATMI fell sharply mainly due to (1) lower profits from dry bulk shipping (2) lower margins from marine engineering projects and (3) higher tax expenses due to lower deferred tax benefit recognized. We lower eFY2011 EPS from 11.3 cents to 9.7 cents.

"We also lower FY2012e EPS from 12.1 cents to 10.9 cents in light of (1) a persistently weak shipping market (2) unabated cost pressures (high steel and wages costs) and (3) lower margins expected for dry bulk carrier construction in 2011 and 2012. Revised target price of $1.635. MAINTAIN HOLD."

Cosco Corp says Q2 net profit down 53%

Singapore-listed Chinese shipbuilder Cosco Corp (COSC.SI) reported a 53% fall in its second quarter net profit on Monday, saying it was hurt by lower contributions from dry bulk shipping and shipyard operations as well as higher income tax.

The firm posted net profit of $31.9 million for the three months ended June, down from $68.4 million a year earlier.

“The group maintains a cautious outlook for 2011 as the global economy remains fragile and its recovery uneven with growing concerns over the sovereign debt crisis in Europe and other places,” Cosco said in a statement.

 

It added that the gradual appreciation of the Chinese yuan against the U.S. dollar, increasing interest rates and a potential wage hike in China, as well as greater raw material prices, may weigh on the operating margins of its shipyard operations.

 

Cosco Corp (S) rated 'hold' by Phillip Securities

Phillip Securities Research in a May 31 research report says: "Cosco Corp announced during lunch that it had entered into and made effective a US$114 million contract with ATP Oil Gas (UK) limited for the construction of "Octabuoy Topside Module"-Octabuoy Phase 2.

"Separately, Cosco also announced that the US$1.05 billion contract for two Sevan 650 drilling units from subsidiaries of Sevan Drilling ASA has been made effective. With these contracts, Cosco's year-to-date order wins have been lifted to approximately US$1.8 billion out of which US$1.6 billion is from rig construction.

"We do not see a fundamental shift in the value of Cosco's business arising from these recent developments. Therefore, we stick to our initial assignment of 18x FY12E P/E with target price of $2.18. MAINTAIN HOLD."

Cosco Corporation (S) downgraded to 'hold' by Phillip Securities

Phillip Securities Research in a May 4 research report says: "Sevan Marine recently announced the completion of the initial public offering (IPO) of the shares in its ultra deepwater drilling arm, Sevan Drilling ASA. Reuters reported that Sevan Drilling has managed to raise a total of US$363 million from IPO and intent to proceed with the purchase of two newbuilds contracted with Cosco.

"Cosco Corp announced on April 13 that COSCO (Nantong) Shipyard Co Ltd. secured a contract from Seadrill to construct a new unit self-erecting tender drilling rig T-17 valued at US$66 million. With this contract, Cosco's total contract wins and orderbook to date adds up to approximately US$281 million and US$5.9 billion respectively.

"We assign a multiple of 18x FY12E P/E to derive a fair value of $2.39 for Cosco which we feel is amply justified.DOWNGRADE TO HOLD."

Cosco recoups losses; cancellation not bad deal - DBS Vickers

Cosco Corp. (F83.SG) is flat at $1.84, recovering earlier losses (it hit an intraday low of $1.80) which came on news the shipbuilder had received a cancellation request from an Asian ship owner for a 79,500 DWT bulk carrier contract. 

DBS Vickers says “cancellations are not always bad news.” It understands that the ship owner is a shipping JV, where the partners decided to scrap the investment; the companies were not facing any risk of bankruptcy. 

 

“We believe this is a one off cancellation as it is rare for ship owners to cancel an order during construction.” It notes, cancellation costs are high given the forfeit of a 20% deposit plus a 5%-10% penalty, so this cancellation is “not a bad deal” for Cosco. 

 

It estimates the contract price to be around US$50 million ($63.9 million), meaning “Cosco could lock in an immediate gain of US$12.5 million-US$15 million...in addition to this, we believe it makes sense for Cosco to continue building the vessel for a spot sale“.

 

DBS has a Buy call and a $3.16 target.

 

Cosco cancellation shows containership oversupply - Credit Suisse

Cosco Corp. (F83.SG) is down 1.6% at $1.81, failing to rebound along with the broad market after it announces that an Asian ship-owner has cancelled a 79,500 DWT bulk carrier shipbuilding contract.  Though the cancellation is not expected to have a significant impact on Cosco’s NTA and EPS and the ship-owner has paid compensation, Credit Suisse says the cancellation “highlights continued oversupply in bulk carrier market.” 

It believes the customer is Vanship Holdings and that the contract was placed at the height of the shipbuilding boom in 2008. It says depressed Baltic Dry Index levels could trigger order cancellations; it expects an average BDI level of 1,800 in 2011 and 2,000 in 2012. 

 

“While there might be a near-term rebound, we don’t expect a strong rally given the oversupply, with the orderbook/fleet ratio at 49%.” It keeps Cosco at Underperform with a $1.60 target. “On 2011 P/E of 17X, Cosco is one of the most expensive shipbuilders globally, and we suggest a switch to Yangzijiang (BS6.SG).