Cosco has won a turn-key EPC contract worth >US$500m with customer Dalian Deepwater Development to build a DP3 deepwater drillship. This vessel will measure 291m by 50m, is harsh-environment capable and can operate at ultradeep water depths up to 10,000ft, with drilling depths exceeding 30,000 ft.While there has been previous concerns on Cosco's capability in executing such a high-spec build, we take comfort in that the complex design responsibility rests entirely with the client.
On the back of this win, KE is raising its FY11 forecast by 11% to S$267.2m, and FY12 by 5% to S$285.9m. We estimate Cosco’s current orderbook at around US$7bn, with over US$1.5bn secured YTD. Separately, Cosco has also finalized 2 more bulker newbuild contracts as part of the US$440m order win announced last month. Kim Eng is upgrading Cosco to a BUY with a new TP of $2.10, based on P/B valuations of 4.2x.
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