Cosco

Cosco: Announced contracts worth US$216m, the first contract involves the construction of four 111,000dwt tankers with a European shipowner valued at US$180m in total, while the other two contracts are worth US$36m, to build an oil tanker of 22,000 dwt.for an Asian company and to build a stinger barge for an EU Co. The latest contract brings Cosco’s year-to-date order wins ~US$816m and its order book to ~US$6.6b, which could support top-line revenue for the next 2-3 years, although we caution of deteriorating margins faced by Cosco. Latest wins could lend some support to share price, although we reiterate that negative sentiment on share price could remain after peer China Ronsheng appealed for financial aid to the PRC govt and shareholders over the weekend, which could reignite concerns on Cosco who has has one of the highest gearing in the sector with net gearing at a whooping 82%, in contrast to Yangzijiang of a negligible 4%.