WHAT THE BROKER SAID
About a year ago DBS Vickers Securities maintained its 'buy' recommendation on China Shipping Development, which was expected to gain from increasing demand for commodities. It set a one-year price target of HK$3.10.
Strong dry bulk and international oil transport businesses continued to boost revenue growth for China Shipping. Coal transport had returned to earlier levels.
Revenue grew 21 per cent year on year in June, mainly driven by domestic coal transport and international oil transport.
DBS Vickers said it forward price was based on an expanded price/earnings target of 15 times and upward revision of its 2004 earnings estimate, but cautioned investors that strong sentiment towards H shares might lead to near-term price volatility.
It maintained its positive view of China Shipping because it was in a position to capitalise on rising oil and dry bulk transport, backed by new capacity, including dry bulkers, aframax tankers and very large crude carriers.
In March, China Shipping Development reported that its net profit surged 73 per cent to $1.02 billion yuan last year. Turnover was up 19 per cent to 4.88 billion yuan. On Friday the counter closed at $5.25.