Cosco

Cosco: recall our snippet yday morning on Cosco’s possible rig contract win. The co announced last night that its 51% owned subsidiary Cosco Shipyard Group has secured a contract from Axis Offshore (a JV btwn Danish shipowner J Lauritzen and Norwegian PE fund HitecVision), valued at over US$200m for a Harsh Environment Semi Sub Accommodation Rig. The rig will be built to Global Maritime’s design, GM500A and have a capacity of 500 POB, DP3 Dynamic Positioning system, and is designed to operate in the North Sea. Delivery is scheduled for 1Q15. The parties intend that the contract will be made effective within 3 mths from the date of signing, and Cosco will give an update when the shipbuilding contract becomes effective. This contract brings Cosco’s YTD order book to an estimated US$1.4b, and outstanding orderbook to approx US$6.4b. While this contract would add to Cosco’s offshore building track record, any upside could be capped given the relatively low price of the rig contract. In Aug ’12, Keppel announced a similar accommodation rig order with a similar delivery period valued at US$315m. Cosco trades at 16.9x P/E. The stock remains one of the least loved in the Street with 21 Sells and 1 Hold, with avg consensus TP of $0.75.