Friday, December 20, 2013
Cosco Corp: UOB KayHian estimate ytd contract wins at US$3b, surpassing its projection of US$2.5b. House raise its 2014-15 net profit forecasts by 7-13% on higher contract win assumptions of US$3.0b each for 2013 and 2014 (previously US$2.5b). Dry-bulk shipping rates appear to have emerged from their cyclical bottom. While 4Q is typically a seasonally high period for dry-bulk shipping, the Baltic Dry Index (BDI) - currently at 2,156 after its recent peak of 2,337 on 12 Dec 13 - is three-fold of its level of 720 a year ago. If dry-bulk shipping rates continue to improve throughout 2014 (notwithstanding a seasonal low in 1Q14), shipyards are likely to see a new dry-bulk shipbuilding cycle. Traditionally, Chinese shipyards dominate in the global building of dry-bulk carriers. UOB KayHian maintains HOLD with $0.85 TP, tips for a entry at $0.70.