CosmoSteel Holdings

CosmoSteel Holdings: Voyage Research rerate CosmoSteel to Increase Exposure with a TP of $0.40, citing the group as a beneficiary of sustained energy investment in the Asia Pacific region. For instance, the company is experiencing demand from China, which is investing in natural gas facilities as it switches away from coal driven power plants. Note that Oil majors are continuing to invest in the Asia Pacific region. Chevron has allocated 42% of its 2013 capital expenditure budget to this region, while Exxon Mobil has increased its investments overseas with capex outside of US growing by 24% year-on-year in the first nine months of 2013. Shell, BP and PetroChina are also building large scale floating LNG terminals to tap offshore gas fields in Australia. Over in China, investments in natural gas fields and pipelines are poised to increase as the country taps into shale gas reserves and shifts away from using coal as an energy source. Given the healthy pipeline of projects in the region, we are optimistic that the company should revert to double digit growth in 2014. 2013 revenue would have been higher if not for competition and to some extent, timing differences between delivery and the award of contracts. As such, expect the company to deliver sequential growth in 1Q FY14 (ending Dec 2013).