Cosco

Cosco: DBSV maintains Hold with TP $0.83. Expects Cosco to report a recurring net profit of $16m in its upcoming 3Q results due 5 Nov , after market. This assumes a forex loss of $5m resulting from RMB strengthening against USD. Further the house cautions earnings could be affected by the potential reversal of profits previously recognised on the drillship contract termination. DBSV is optimistic that Cosco will emergy as a competitive offshore yard in China in another cycle or two as it gains experience in various offshore products, but earnings recovery will take time as it moves up the value chain gradually. The house prefers Yangzijiang as a purer play to ride the shipbuilding recovery and KEP as the global leader in the offshore space.