Huge full year losses expected at China COSCO Holdings

Singapore: In a bearish report on dry bulk shipping Singaporean investment bank UOBKayHian has predicted that full year losses at Cosco flagship, the Hong Kong-listed China COSCO Holdings will hit RMB5.6bn. While noting the company’s container fortunes were improving in the second and third quarters, dry bulk losses continue to experience “huge losses”. The bank maintained a sell on the stock with a target price of HK$2.30. In an all round bearish note on dry bulk UOBKayHian said the China demand story was over, and that growth in iron ore imports to the PRC this year would be “almost flattish”. This assertion comes hot on the heels of news that Baosteel has shuttered a 3m ton-a-year plant this week on weak demand while 40% of China’s iron ore mines are standing idle.   

Factoring in delivery delays and scrapping UOBKayHian said the global dry bulk fleet will grow 13.6% and 11% this year and next respectively while seaborne commodities trade growth is estimated to grow at just 3.7% and 3.4% in 2012 and 2013 suggesting “severe oversupply”.  [28/09/12]

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