Cosco Down

Cosco Corporation (Singapore) somehow has a way of spooking the market without intending to. What should have been seen as a normal management change came across as a sudden shake-up, causing its stock to sink further amid concerns already about slowing orders.


The counter closed almost 10 per cent lower at $2.44 yesterday after losing as much as 13 per cent intra-day, as the market reacted to news of the sudden announcement of the retirement of vice-chairman, president and executive director Ji Hai Sheng on Wednesday, and his response to media queries that he had only just been told of the board's decision.

According to industry sources, the change was expected and had been well known in the market since the announcement two weeks ago that Cosco chairman Wei Jia Fu would step down.

'It was a planned transition and everyone in the market knew about it since the changes with Captain Wei last month,' said a source. 'I'm surprised it sounded like a sudden decision because it makes the company look bad.'

DMG and Partners analyst Serene Lim said in a report released yesterday: 'A confluence of concerns over possible cancellation orders and rising steel prices has plagued global shipyards in the past week. Cosco has not been spared. This led to a slump in investors' confidence in Cosco shares.

'A new and sudden change in a key management role does not bode well in this weak investor climate, in our view. We believe that the share price is likely to be pressured, at least in the near term.'

Cosco called a briefing for analysts last night, apparently to reassure investors. It is believed that management sought to emphasise that Mr Ji's move was a normal internal transfer and that nothing is amiss.

Several poorly handled developments at the company have dragged the stock down in recent months. In March, rumours swirled that accounting problems were the real reason behind the resignation of Cosco's financial controller.

Then in April, news of a US$202 million order cancellation caused the stock to fall more than 15 per cent to $2.85 on concerns of more withdrawals.