by Citigroup Research (March 17)
Amid concerns over a global slowdown, we believe Cosco is better positioned than its sector peers because of its (i) strong balance sheet, cash flow - Cosco exited 2007 with $900 million net cash and we project net cash will reach $1.35 billion and -9% FCF yield this year;
(ii) potential replacement of parent's large fleet of ageing ships can support and fill Cosco yards during a downturn. We are cutting our earning estimates by 9% to 30% over 2008 to 2010E to reflect lower margin assumptions and more conservative orderbook wins.
We introduce 2010 estimates, and assume 29% EPS CAGR over 2007 to 2010E.
Our target price is cut from $8.30 to $4.50 based on sum-of-parts valuation.
- Research Report by Citigroup (17 March)
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