COSCO Corp: A client of COSCO Corp has requested to push back the delivery for two rigs by nine months, on the back of the deteriorating oil market.
The US$380m contract for two LeTourneau Super 116E jackup drilling rigs was announced in Nov '13, with delivery expected in 1H16 and 2H16 respectively.
Despite higher sales in its recently released FY14 results, the group saw lower gross profit after making inventory write downs and allowances for expected losses on construction contracts.
In addition, net gearing spiked to 1.5x (3Q14: 1.2x), due to increased loans for working capital, while operating cashflow was a negative $1.4m for the year.
The street still remains extremely bearish on the counter, rated with 13 Sells, 2 Holds and zilch buys. The average 12-month TP of $0.44 is 14% below the last traded price.
Current valuation of 0.82x P/B is significantly lower than its 3-year average of 1.3x.