The Straits Times / The Business Times News on Cosco

Cosco's price erosion deals heavy blow to punters

MARKET darling Cosco Corp appears to have hit a rough patch recently.

Although the stock earlier won accolades from analysts who were bullish on its prospects, following the company's acquisition of a 51 per cent controlling stake in a sister company, Cosco Shipyard Group Co (CSG), focusing on ship-repair, the counter has come under heavy selling pressure in the past month.

Cosco's share price has tumbled 14.8 per cent over the past four weeks. This steady erosion has hit punters very hard, especially those who had bought covered warrants issued on Cosco by foreign banks.

And the selling in the covered warrants continues unabated, even after Cosco's share price has stabilised.

While Cosco's stock closed unchanged at $2.24 on a volume of 8.1 million shares yesterday, the covered warrants issued by BNP Paribas, for example fell 0.5 cent, or 5 per cent, to 9.5 cents on a volume of 1.16 million units.

Dealers are hard put to explain Cosco's recent weakness as it is still well-liked by analysts.

'Cosco started slipping after news that SembCorp Marine (SembMarine) sold 4.6 million shares at $2.55 apiece at the end of last month,' said an institutional dealer.

The sale signalled that Cosco might be fully valued, he added. Following the sale, SembMarine reduced its stake in Cosco to 3.2 per cent.

Apart from holding a stake in Cosco, SembMarine is also a shareholder of CSG.

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