Cosco Corp

Cosco Corp: Reported another strong set of results above expectations, with bottom-line continuing to impress. Rev at $952.7m, +27%YoY and -1%QoQ, while Net Profit at $55.1m, +147%YoY and +16% vs consensus estimates of $47.5m. Grp saw continued strong performances across all business segments due to higher dry bulk charter rates secured and higher contributions from shipyard operations, while operating margins improved significantly, at 11.25% vs 6.6%YoY....

Result brings 9m10 Rev to $2,750.2m, +26%YoY and Net Profit at $155.2m, +68%YoY, translating to 9m10 EPS of 6.93c, on track to hit average FY10 estimates of 8c. Annualizing EPS would value Cosco at 21x FY10E P/E vs its historical average of 23x P/E. YTD, grp has delivered a total of 24 bulk carriers and 1 jack-up rig, while orderbook stood at $10.4b, vs annualized FY10 rev of $3.7b, underpinning earnings visibility till 2013....

Going forward, grp will continue to focus on deliveries and upgrade facilities & capabilities to increase efficiency and productivity, aiming to reduce average time to build 57,000 DWT vessels to 12 months, from current 14-16mths. Management tips pricing to be firmer due to weaker USD and to factor rise in raw material prices, while the FPSO market will rebound stronger in 2011….

Citi & Kim Eng maintains Buy Call with $2.30 TP based on 21x FY11E P/E and $2.43 TP based on 4.8x P/B respectively.