Cosco

Cosco: OCBC Initiates with Hold and $0.98 TP. Note that in recent years, Cosco has made significant efforts to build up its offshore marine engineering capabilities such that the offshore segment accounts for >50% of new orders in FY2011. However, as it is relatively inexperienced in building drilling rigs and production facilities, the offshore segment could take a substantial period of time before it sees any significant productivity improvements. Besides, the group also faces strong headwinds in the shipping and shipbuilding industries. House apply an industry-average P/B multiple of 1.6x to COSCO and obtain a fair value estimate of $0.98.