Brokers' Take

Cosco Corp, Nov 4 close : $1.07

5 November 2004
The Business Times

Merrill Lynch Research, Nov 3

WE initiate coverage on Cosco Corporation with a buy' recommendation and target price of $1.53,which translates into 47 per cent upside.

Poised for further re-rating: We are confident our earnings forecasts - one of the highest in the market - can be achieved. We believe shipyard growth will continue to outperform market expectations next year. Other share price drivers include rising earnings from the bulk carrier fleet and the possibility of more attractively priced asset injections by the parent.

We expect an 89 per cent surge in shiprepair profits next year, following the acquisition of a 51 per cent stake in Cosco Shipyard Group. Zhoushan and Dalian will soon have additional capacity to cope with the extremely strong demand for shiprepair services. The partnership with SembCorpMarine is expected to help Cosco move up the repair value chain. BUY.

Compiled by KENNETH LIM