Struggling Cosco at risk of sinking after colossal Q1 miss

Due to double whammy from offshore and shipbuilding.

After its extremely disappointing Q1 results, analysts note that Cosco Corp is like a ship in rough seas without a clear nautical chart.

According to Yeak Chee Kong of Maybank Kim Eng, Cosco is at risk from the double weakness in both its shipbuilding and offshore segments.

"Worryingly, Cosco does not appear to have any strategy for navigating this downturn. While it has been striving to improve efficiency and reduce costs, consistently weak margins suggest not much fruition," Yeak noted.

"Orders secured YTD were USD255m, plus seven 3,600 TEU containerships from Maersk whose value was not disclosed. We estimate them at USD250-280m. We forecast USD1.3b for the year. This may still be a struggle for Cosco. Although gross orderbook was USD8.1b, we believe this is at risk of further write-downs from contract terminations,” he added.

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