Cosco Corp (Singapore): China Cosco (1919 HK) said it plans to restructure its dry bulk shipping operations, as the nation’s biggest shipping co moves to strengthen its loss-making business amid a global downturn and industry overcapacity.
This could reignite interest in restructuring at the Cosco Group level. Recall this story was picked up in Jan this year, following the Chinese govt’s plans to push forward the complete listing of major centrally-administered SOEs.
Back then, DBSV noted that Cosco Corp stands to benefit, as the parent could inject the remaining ownerships in 2 shipbuilding operations, i) 19% Cosco Shipyard Group (51% owned by Cosco Corp currently), and ii) 100% stake in Cosco Shipbuilding Industry Co which owns 2 shipbuilding yards in Nantong and Dalian. In turn, Cosco Corp may divest its fleet of 12 bulk carriers (Handymax/ Panamax vessels) worth ~$400m.
Another catalyst could be the dual listing of Cosco Corp in HK, where it eventually joins the rest if its sister companies on the same exchange.
Stock trades at 11.2x P/E.
The majority of Street has Sell ratings currently, with TP btwn $1.00-2.20, on fears of order slowdown and potential financial difficulties at key customer Sevan Drilling.
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