Cosco Singapore Declines After Client Cancels Two Vessel Orders
By Kyunghee Park
Dec. 4 (Bloomberg) -- Cosco Corp. Singapore Ltd., a shipbuilding unit of China’s largest shipping company, dropped by the most in more than two weeks in Singapore trading after a client canceled orders for two bulk carriers.
Cosco Singapore fell as much as 7.1 percent to 79 Singapore cents, the biggest drop since Nov. 20. The stock, which traded at 84 cents as of 10:18 a.m. in the island city, was the worst performer on the 30-member Straits Times Index.
Demand for new ships and offshore projects has slowed since the third quarter as the global financial crisis dried up funds and curbed global trade. That has raised investors’ concerns that deliveries may be delayed or canceled.
“This announcement is but the start of the negative news flow,” Singapore-based Kevin Chong at Deutsche Bank AG wrote in a note dated yesterday. “Risks are high with a potential industry overbuild of bulk carriers, most of which make up Cosco’s orders, difficulty in securing financing and potential shipyard capacity overbuild.” He rates the stock as a “sell.”
Cosco Singapore said yesterday that a client it didn’t identify canceled two of the five 57,000-ton bulk ships ordered last year from its Cosco (Dalian) Shipyard Co. unit. The client agreed to pay 80 percent of the total contract price for the remaining three vessels by this month and will compensate the company for all expenses incurred for the two canceled orders.
To contact the reporter on this story: Kyunghee Park in Hong Kong at [email protected]
Last Updated: December 3, 2008
By Kyunghee Park
Dec. 4 (Bloomberg) -- Cosco Corp. Singapore Ltd., a shipbuilding unit of China’s largest shipping company, dropped by the most in more than two weeks in Singapore trading after a client canceled orders for two bulk carriers.
Cosco Singapore fell as much as 7.1 percent to 79 Singapore cents, the biggest drop since Nov. 20. The stock, which traded at 84 cents as of 10:18 a.m. in the island city, was the worst performer on the 30-member Straits Times Index.
Demand for new ships and offshore projects has slowed since the third quarter as the global financial crisis dried up funds and curbed global trade. That has raised investors’ concerns that deliveries may be delayed or canceled.
“This announcement is but the start of the negative news flow,” Singapore-based Kevin Chong at Deutsche Bank AG wrote in a note dated yesterday. “Risks are high with a potential industry overbuild of bulk carriers, most of which make up Cosco’s orders, difficulty in securing financing and potential shipyard capacity overbuild.” He rates the stock as a “sell.”
Cosco Singapore said yesterday that a client it didn’t identify canceled two of the five 57,000-ton bulk ships ordered last year from its Cosco (Dalian) Shipyard Co. unit. The client agreed to pay 80 percent of the total contract price for the remaining three vessels by this month and will compensate the company for all expenses incurred for the two canceled orders.
To contact the reporter on this story: Kyunghee Park in Hong Kong at [email protected]
Last Updated: December 3, 2008
