Written by The Edge
Tuesday, 23 February 2010 11:10
Cosco Singapore (F83.SG) is off 5 cents at $1.23 on disappointment with FY09 earnings and worries over further weakness in coming quarters as ship builder hasn’t unveiled any major contracts for some time.
Lack of new jobs may eventually take toll on Cosco’s balance sheet with no fresh funds to service existing projects.
“Cosco reported negative operating cashflow of $164.4 million in FY09, reinforcing our ongoing worries of a cash crunch,” says Kim Eng Securities, which has “sell” call with 81 cents price target; expects Cosco to go through “patchy period” over next 18 months, with sustainable recovery only from mid-2011.
Cosco reported FY09 earnings fell 64% at $110.1 million on lower revenue, higher operating costs. Management expects freight rates to remain volatile, with any increase possibly dampened by excess vessel supply. Adds US$5.6 billion shipbuilding orderbook subject to cancellation risks.
Immediate support at $1.20, last breached Feb 10.
