DBS raised the target price of COSCO International (0517.HK) from HK$5.56 to HK$6.08, based on its net cash position and current forecasted price-earnings ratio of 10 times that of shipping-related business.

Previously, the company sold 16.85% of its shares in Ocean Properties (3377.HK) at a price of HK$5.60 per share and cashed out HK$5.23 billion. The key question for the future is how COSCO will use this huge amount of cash; DBS expects COSCO to focus and accelerate the development of its core shipping business.

The bank added that the sale of shares will increase COSCO International's net cash per share to HK$4.14; based on Thursday's closing price, this means that the price-earnings ratio of its steadily growing shipping-related business in FY11 was less than three times.

COSCO International rose 4.92% yesterday to close at HK$4.69.