According to a report published by Guoyuan Hong Kong, it first paid attention to COSCO International Holdings (00517-HK) and gave it a purchase rating. The target price was HK$5.11: equivalent to 10.7 times and 8.8 times the company's earnings per share in 2010 and 2011, with room for a 33% increase from the current price.
The report points out that the shift of global shipbuilding centers to China provides long-term driving force for the shipping service business. China's shipbuilding completed, new orders, and handheld orders accounted for 34.8%, 61.6%, and 38.5% of the world market share, respectively. In terms of the number of new orders received and the number of hand-held orders at the end of the year, China became number one in the world in 2009. As the global shipbuilding center moves to China, it provides long-term driving force for COSCO International's shipping trade agency, ship equipment and spare parts, container paint, and ship paint businesses.
The parent company has full support and a stable source of revenue. In the overall development strategy of COSCO Group, COSCO International has developed into a global shipping service platform that relies on the overall advantages of COSCO Group. In 2009, revenue from COSCO Group customers accounted for about 42% of the revenue of the shipping services segment. Among them, the revenue segments of shipping trade agents, ship insurance consultants, and ship equipment and spare parts supply came from COSCO Group customers with a high proportion of revenue, which was 69%, 72%, and 69%, respectively. In the container paint segment of the paint production and sales business, CIMC Group is the company's largest customer, and COSCO Group is also the second largest shareholder of CIMC Group.
The valuation is undervalued. Currently, the total market value of the company is about HK$5.8 billion, while the market value of COSCO International's 16.85% of Ocean Real Estate is about HK$5.6 billion, which is comparable to COSCO International's own market value. Even excluding shipping service assets, the net cash held by the company at the end of 2009 alone reached HK$1.26 billion, far greater than the difference between the two. COSCO International's long-term strategy is positioned as a professional leading integrated shipping service provider. It is expected that COSCO International will reduce its shareholding in Ocean Real Estate, and the funds obtained by cashing out will provide sufficient cash for COSCO International to carry out further mergers, acquisitions and integration activities in the field of shipping services.
COSCO International Holdings closed the full day at HK$3.90.