Cosco announced that it has secured contracts valued over US$55m to build 2 bulk carriers of 57k dwt each, via 51% owned subsidiary, Cosco Shipyard Group. According to mgtm, the new orders are scheduled for deliveries in Sep 11 and Mar 12 respectively. This follows recent contract wins including: 2x 92.5k dwt for US$70m, 11x 57k + 4x 82k for US$440m, suggesting that order momentum remains very strong.
However, the pricing of around US$27.5m per vessel reflects the current soft prices for newbuilds, which is a cause for concern. Despite seeing an improvement in its shipbuilding margin to about 6-8% in 2Q10, this is still relatively low compared to its peers such as Yangzijiang. Based on Bloomberg estimates, the stock currently trades at about 21x FY10 and 16x FY11 PER.
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