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SHARES in Cosco Shipping International surged 13 per cent on Friday morning, as fellow Chinese shipbuilder Yangzijiang Shipbuilding (Holdings) gained on better-than-expected third-quarter earnings.
Cosco shares traded at 43 Singapore cents as at 11.11am, up 5 cents or 13.2 per cent, from its previous close. It has gained 43 per cent since it announced its takeover of Singapore-listed logistics firm Cogent Holdings a week earlier.
The gain on Friday morning could be due to Yangzijiang's rally, said CMC market analyst Margaret Yang.
"I guess because Yangzijiang has rallied so much this year, people are looking at Cosco for a catch-up play," she said, noting that Yangzijiang has outperformed Cosco throughout the year and is getting "more and more expensive".
"We will see, maybe later in the day there will be more announcements," she added.
Yangzijiang shares has jumped 4.5 per cent to S$1.635 on Friday morning, on a 208 per cent increase in its third-quarter earnings.
Others believe the sharp rise in Cosco shares could be due to continued play on its takeover bid for Cogent, transforming itself into a logistics business.
"Sometimes the fund managers won't come in so early," said a remisier. "After that they play it up, then sell it out."
Cosco on Nov 3 launched a S$488 million cash buyout of Cogent at S$1.02 a share. It also plans to buy Indonesian shipping logistics company PT Ocean Global for S$14 million, also in a cash deal.
These moves by one of the big China plays on the Singapore Exchange, announced separately on Friday alongside its third-quarter earnings, confirmed analysts' speculation that the logistics business could be Cosco's new focus.
In a note on Nov 6, DBS analyst Ho Pei Hwa said that the bail out offer by Cosco's parent in May 2017 leaves it with a cash hoard of S$300 million, instead of net debt.
"This bodes well for the acquisition of new businesses as it will be left with a mid-sized dry bulk fleet of four vessels, post disposal of the shipyards," she said.
An earlier-than-expected recovery in oil prices could catalyse an industry recovery, with Cosco securing more orders at attractive prices. Sharp improvements in productivity could also cause its share price to re-rate, she added.