Brokers' Take

Cosco Corporation

March 20 close: S$2.88

DBS GROUP RESEARCH, March 20

COSCO has won its first jack-up contract from Remedial Cyprus, worth US$124 million, for delivery in Q3 2008. This comes with an option for one more, expiring end-2007. We can expect more orders to follow, as this is a new design and Remedial plans to build up the fleet. The contract will raise Cosco's order book by 11 per cent to US$1.2 billion, and new contract wins by 15 per cent to US$929 million in just the first three months of 2007.

Maintain 'buy', and target price of S$3.45: The stock is trading at a PE of 22 times FY2007 earnings, declining rapidly to 14.6 times (FY2008) versus its three-year EPS CAGR of 38 per cent. We expect the momentum in winning offshore contracts to intensify.

BUY

Compiled by UMA SHANKARI