Singapore’s Big Winner for the Week: Cosco Corporation (Singapore) Limited

Cosco Corporation (Singapore) Limited  (SGX: F83) has gained 8.4% since last Friday to end the week at S$0.515.

During the same period, the Straits Times Index  (SGX: ^STI) – Singapore’s market barometer – had inched up by just 1.1% to 3,450 points. This makes Cosco one of the big winners in Singapore this week.

Cosco has one of the biggest ship repair, ship building, and offshore marine engineering operations in China and is amongst the top shipping conglomerates in the world. The firm was once part of the Straits Times Index but was replaced by CapitaMalls Asia in 2010; CapitaMalls Asia has since been privatised by CapitaLand Limited (SGX: C31).

On Friday, 27 March 2015, Cosco announced that a majority-owned subsidiary had secured a contract with Maersk Line to build seven 3,600 twenty-foot equivalent (TEU) container vessels. The vessels are slated for delivery between April 2017 and November 2017. The contract value was kept under hoods though.

Under the terms of the deal, Maersk Line has the option to place orders for another two container vessels within eight months should the need arise. Cosco said that it will be making an announcement if the option is exercised.

For the financial year ended 31 December 2014, Cosco saw its revenue rise 21% to S$4.3 billion as a result of higher shipyard revenue. However, its net profit tumbled 32% year-on-year to S$20.9 million, mainly due to increased distribution and finance expenses for the year.

Cosco is now trading at a whopping 55 times its historical earnings due to the aforementioned plunge in profits.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.