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SINGAPORE—Cosco Corp. Singapore Ltd., the shipbuilding
and repair unit of China’s largest shipping company, may
increase its controlling stake in affiliate Cosco
Shipyard Group, president Ji Hai Sheng said.
Cosco
Singapore plans to buy 19 percent of Cosco Shipyard from
parent China Ocean Shipping (Group) Co., adding to its
51-percent holding, Ji said in a phone interview
Tuesday, without providing financial details.
“We will
make a decision pretty soon,” Ji said. “We expect more
orders in marine engineering and plan to convert vessels
from single hull to double hull or from oil tankers to
bulk carriers.”
Cosco
Singapore will focus on conversions as the process uses
less steel than building new vessels, helping offset
higher steel costs. The company is also expanding its
marine-engineering business to benefit from increased
oil exploration because of the higher prices of the
commodity.
Shares
of Cosco
Singapore
rose 5.2 percent to S$3.44 on the city’s exchange,
gaining for a fifth day and closing at the highest since
March 7.
“Possible share price catalysts include stronger
offshore contract momentum, completion of the
acquisition of 19-percent stake in Cosco Shipyard Group
at attractive valuations and clearer management strategy
on input cost management,” JPMorgan Chase & Co. analysts
led by Winnifred Heap wrote in a note dated Tuesday.
Heap,
who maintained her “overweight” rating, cut the stock’s
12-month target price by half to S$4.20, citing reduced
net margin estimates from higher steel and labor costs.
CLSA
Asia-Pacific Markets analyst Caroline Maes downgraded
the stock to “outperform” from “buy” in a report dated
Tuesday, citing a higher risk premium and margin
pressures from steel and labor costs. She also trimmed
her share-price target by 36 percent to S$3.65 from
S$5.70.
Cosco
Singapore said yesterday its financial controller, Teo
Chuan Teck, resigned because of personal reasons,
without elaborating.
The
stock has slumped 17 percent this month, compared with a
1.2-percent drop in the Straits Times Index, on market
speculation Cosco Singapore may have accounting
problems.
“There
are no accounting irregularities,” Ji said. “I am happy
with Mr. Teo’s performance. I tried to persuade him to
stay but he needs to take care of his sons.”
“We
already have a candidate to replace him,” Ji said,
without disclosing details.
The
company expects profit to increase in 2008 as it
concentrates on offshore business while expanding
capacity, Ji said. Cosco Singapore’s profit last year
rose 64 percent to a record S$336.6 million ($243
million) as it won more orders. (Bloomberg) |
