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17-03-2012, 07:55 PM
If we look at Cosco's last decade history, it has significantly grown (~40 times) ship building/repair business by quickly learning the ship-building and taking low cost advantage. During the same time period, other high cost ship-builders (e.g Sembmarine & KeppFels, Korean companies) have shifted from ship-building business to marine-offshore business as they could not compete with upcoming chinese builders on cost.
Very likely same story will repeat @ Cosco for marine-offshore segment in next decade? Currently Cosco is investing in "learning" the rig-building and as we all know chinese are very quick in learning/copying. As of 2011 Dec, 14 outstanding contracts are of marine-offshore segment. It has become one of the largest players (in China) marine-offshore industry in just 2 years after company shifted its strategy to this new segment. Without any experience in marine-offshore segment, only way to get order is offering contract at significanlty lower price than non-chiense players. As company will gain experience, company should be able to command premium and hence improvement in margins.
However in next decade, Cosco has to face challenges of labour cost inflation in China & Renmbi appreciation.
If Cosco repeats past decade sucess of ship-building story for marine-offshore segment, what would happen to SembMarine & KeppFels? Is this the reason that recently Temasek has sold some (though small) stakes in SembMarine? Is Temasek seeing same head-wind for SembMarine & KeppFels as it had seen for Cosco in 2008/2009 (not remember exactly which year) when it sold entire stake in Cosco?
Very likely same story will repeat @ Cosco for marine-offshore segment in next decade? Currently Cosco is investing in "learning" the rig-building and as we all know chinese are very quick in learning/copying. As of 2011 Dec, 14 outstanding contracts are of marine-offshore segment. It has become one of the largest players (in China) marine-offshore industry in just 2 years after company shifted its strategy to this new segment. Without any experience in marine-offshore segment, only way to get order is offering contract at significanlty lower price than non-chiense players. As company will gain experience, company should be able to command premium and hence improvement in margins.
However in next decade, Cosco has to face challenges of labour cost inflation in China & Renmbi appreciation.
If Cosco repeats past decade sucess of ship-building story for marine-offshore segment, what would happen to SembMarine & KeppFels? Is this the reason that recently Temasek has sold some (though small) stakes in SembMarine? Is Temasek seeing same head-wind for SembMarine & KeppFels as it had seen for Cosco in 2008/2009 (not remember exactly which year) when it sold entire stake in Cosco?