Brokers' Take

Cosco Corp
Feb 22 close: $1.42 (-5 cents)

23 February 2005
The Business Times

MERRILL LYNCH, Feb 21

We maintain our BUY recommendation on Cosco Corp and raise our price objective from $1.53 to $1.83 following a good set of FY04 results. We raise both FY05 and FY06 earnings forecasts by 14 per cent because of higher shipping rate assumptions.

Current valuations of 13 times and 11 times PE for FY05E and FY06E respectively are unaggressive given the group's immense growth potential and the vast opportunities available to them. We forecast 85 per cent earnings growth this year and 18 per cent in FY06. Basis for price objective: Shipyards are valued at 18 times estimated FY06 earnings, comparable to the performance of Cosco's closest listed peer, SembCorp Marine.
BUY

Compiled by R SIVANITHY