[ET Net News Agency, 15 September 2020] COSCO Shipping Ports (CSP)(01199) announced
that its wholly-owned subsidiary, CSTD, has proposed an acquisition of a 26% share in
Guangxi Beibu Gulf Terminal. The total cost for the transaction will be Rmb876mn,
including (1) Rmb487mn of cash, and (2) 40% equity holdings in Guangxi Qinzhou Terminal
which is valued at Rmb389mn.
Morgan Stanley said, if such a transaction is completed, CSP will recognize a pre-tax
gain of approximately US$8.44mn (or Rmb59mn) from the disposal of the 40% equity interest
in Guangxi Qinzhou Terminal.
Despite a potential disposal gain, the research house would view this proposed deal as
value-dilutive due to the expensive valuation. The total transaction cost implies 1.4x P/B
and 43.8x P/E for 2019, at a very large premium to CSP's current 0.3x P/B and 5.6x P/E for
2020.
Morgan maintained its "equal-weight" rating on CSP, with a target price of HK$3.66. (KL)
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01199 COSCO SHIP PORT
Nominal 
4.730 +0.110 (+2.381%) Research Report
15/09/2020 17:51
{I-bank focus}COSCO Ship's recent deal value-dilutive - MS
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