Cosco

Cosco: Results on low end of expectations but in-line. FY11 rev at $4.2b +7.8% yoy with net profit $139.7m -43.8% yoy. This included a expected construction loss of $150.4m. Single margins remained in the single-digits with costs up due to the learning curve, 1st time jobs and overall reassessment of costs of orders.

Increase in rev was due to higher contributions from ship building and marine engrg projects and lower net profit was attributed to lower profitability of dry bulk shipping and higher costs in shipyard ops. Shipyard operations increased 10.1% to $4.1b in FY2011 with 34 bulk carriers delivered. Rev from dry bulk fell 52.9% to $66.8m due to lower charter rates.

Co's orderbook stands at US$6.1b with deliveries up to 1H2014. Co maintains a cautious outlook due to demand concerns and in light that IMF has lowered forecast for global growth from 4.0% to 3.3%. Appreciation of Yuan, China's interest rates, rising wages and raw material cost may affect co's operating margins. Cosco is also targeting 60% of new orders from the offshore segment in 2012.

3c dividend declared. Cosco is trading at 19.7x trailing P/E

Deutsche maintains Hold with TP$1.10

Nomura maintains Reduce with TP$0.69

JP Morgan maintains Neutral with TP$1.10