Furthermore, two European ship owners had rescheduled the delivery of six bulk carriers of 92,500 DWT each and two bulk carriers of 79,500 DWT each. Expect more cancellations and rescheduling. We are expecting more cancellations and rescheduling of shipbuilding orders. Although the shipping industry is showing signs of recovery, the shipping companies continue to have excess capacities and have laid up vessels. They are more likely to cancel and vary shipbuilding orders to reduce the number of empty vessels.
Reduction in net profit forecast for FY2009F. As a result of the cancellation, we have adjusted our net profit forecasts. The greatest impact is in FY2009F, which will see net profit reduced by 4.9% from S$389.7m to S$370.6m. The net profit for FY2010F and FY2011F are S$383.7m and S$395.9 respectively, which are only slightly different from our earlier estimates of S$383.5m and S$395.8m.
From the list, we note that the average P/E and P/B for the industry are 11.12 and 2.67 respectively. Cosco is currently valued at 8.73 times P/E and 2.31 times P/B. Maintain SELL with fair value reduced from S$0.92 to S$0.91. We maintain our sell recommendation on Cosco as it is expected to see more cancellations and rescheduling of ship deliveries. The fair value is reduced from S$0.92 to S$0.91, which works out to 1.5 times book value for FY2009F. This is because of the reduction in net profit for FY2009F due to the cancellation of shipbuilding orders. As Cosco is a mid-sized shipbuilding company, it is valued below the average P/B for the industry.
Sponsored Links
No comments:
Post a Comment