Brokers' Take

Brokers' Choice - Kim Eng getting bullish on Cosco Corp

22 November 2004
The Straits Times

Kim Eng Reseach, Nov 19

KIM Eng Research expects valuations on China shipping play Cosco Corp to improve after it completes its acquisition of a 51 per cent stake in sister company Cosco Shipyard Group (CSG).

The deal got the nod from Cosco shareholders last Thursday.

'The group's net gearing will rise to 0.7 times with the purchase, while overall consolidated gearing will rise to 1.25 times after the acquisition, after including debt from CSG,' it said.

Kim Eng estimates Cosco's profits will reach $95 million for fiscal year 2005 and $110 million for fiscal year 2006.

It pegs Cosco's fair value at $1.33, after adding the valuations for the group's ship repair, shipping and property holdings.

The stock slipped one cent to $1.16 last Friday.

Rating: BUY