Cosco

Cosco: Secured new contracts valued over US$87m to build three bulk carriers of 57,000dwt each, with deposits received, scheduled for deliveries from May2012 to Mar2013. Two more contracts from the order of 15 ships announced in June have become effective, bringing the total of deposits received for contract to 11. Y-T-D Cosco has secured close to US$2bn in contracts in FY10….

We note that Cosco's execution on its previous orders is improving significantly. Grp will be reporting 3Q10 results on 3rdNov. Going forward, grp expects to be a strong beneficiary of Chinese financials moves into ship financing. Kim Eng maintains Buy recommendation, with TP of $2.10. Forecasts and target price have the potential to be raised after 3Q results….

Street has equal mix of Buy, Sell and Hold ratings on stock, with wide range of targets btwn $1.35-$2.30. We note that the stock trades at 24.1x fwd PE in-line with historical average of 23.1x vs Yangzijiang’s 13.3x FY10E P/E, even though at end Jun, both had similar order book size at US$7.3-7.7b.