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2009-6-18 02:49:00 p.m. HKT, XFNA
DJ MARKET TALK: MS Tips Divergent Scenarios For Dry Bulk Outlook
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| 1417 [Dow Jones] Morgan Stanley sees divergent scenarios for 2010 dry bulk shipping rates, tipping Baltic Dry Index could collapse to 2,000 or rise to 4,000, depending on sustainability of China's strong demand for commodities, level of ship cancellations, delays, scrapping, which in turn dependent on near-term dry-bulk shipping rates. Says current valuations for China Cosco (1919.HK) discount 2010 BDI of 4,000, ship values increasing 35% from current levels; suggests taking profits on stock, downgrades to Underweight vs Equalweight, raises target to HK$7.40 vs HK$5.40. Conversely, notes Pacific Basin's (2343.HK) valuation implies 2010 BDI of 2,000, second-hand ship values remaining constant at current levels; keeps Pacific Basin at Overweight, raises target to HK$6.20 vs HK$6.00. House raises China Shipping Development (1138.HK) to Overweight vs Equalweight on improved outlook from FY10 onward, raises target to HK$13.61 vs HK$7.23. Trio down 0.2%-2.9% midday. (SUT) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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