According to a report by Shen Wan, 00517-HK 's market capitalization is lower than net cash, giving a "buy" rating for the first time, giving a 20 per cent discount to 20 per cent of the company's holding company with a target price of HK $4.99. The net asset value per share includes a valuation of HK $1.72 per share in the shipping services business, with a 10-fold adaptation rate for some of the business, the company's current holding net cash of HK $0.84 per share, and the net cash per share of HK $3.71 from the future disposal of Cosco Properties.
The report points out that the equity transfer of Cosco Real Estate. In accordance with the instructions of SASAC and the requirements of COSCO Group, Cosco International is likely to transfer its stake in COSCO property this year. The transfer will help COSCO International's main Russian business, which focuses on shipping services, to boost the company's 2010 performance and net cash at one time.
Market capitalization is lower than net cash. If Cosco International were to sell its stake in Cosco at the current price of HK $5.90 a share, the company's net cash holdings would rise to HK $4.55 per share from the current HK $HK$0.84. At present, the company's closing price is just HK $4.06, corresponding to a discount of about 10% per share in net cash. The value of the company's largest integrated shipping service delivery business in China is not reflected at all.
The business of shipping services grew steadily. In addition to holding a 16.85% stake in Cosco on behalf of COSCO Group, Cosco International's main business is shipping services. The bank expects the company's container paint to bottom out in 2010 as the container manufacturing industry recovers and remain stable in 2011 and 2012; the ship insurance and spare parts business has grown moderately, with the acquisition of Lianyue in 2009 and the establishment of a new peak. Fuel supply will become a new growth pole, which will significantly increase the company's 2010 revenue and costs and slightly increase gross profit due to the high turnover and low gross margin of the fuel business. If there are no new orders, the company's shipping agents and marine coatings will decline to a certain extent in 2012.
Overall, as a leading domestic shipping service provider, the company's performance will grow steadily in the future. There may be new asset injections in the future. After the completion of the equity transfer of Cosco, the company has a lot of hand-held cash and may continue to develop its offshore fuel supply business through asset acquisitions.
Cosco international holdings rose 0.72 per cent to HK $4.059 yesterday.