Cosco

Cosco: OCBC maintains Sell with $0.61 TP. Note that 2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore). After recording net profit of $139.7m and $105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below $50m. Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front. Looking ahead, expect the operating environment for the group to remain difficult. Any credit tightening in China may also affect the ability of customers to meet their financial obligations.