Cosco

Cosco: Macquarie initiates with U/p, TP $0.60. Tip Co. as underserving of rich valuations.
Co. trades at an expensive 1.43x against Asian shipbuilders’ average of 1.22x concerned with the lack of margin visibility due to weak yard execution and the sharply slowing dry bulk new orders trend.

Believe that current valuations are too rich and have high de-rating potential. High shipbuilding exposure to bulkers unfavourable. Execution record still spotty and contribution from stable, non-shipbuilding segments too minor. Strong O&M order wins YTD but risks still remain. Stock currently trading at 1.43x on our 2012E book value, key catalysts from 1) continued disappointing margins from 4Q results in Feb.