Cosco faces debt threat

COSCO has had negative operating cash-flows for the past three years, says OCBC.

According to OCBC COSCO’s net gearing has spiked to 53.3% as of end-2Q12 (end-FY10:  7.0%; end-FY11: 29.1%) and may continue to worsen going forward. 

Here's more from OCBC:

With the majority of its 39 bulk carriers due for delivery by mid-2013,  the group is under pressure to secure new orders.

However, given the  weak operating conditions, new orders are likely to come at low margins  and with back-ended payment schedules. This would inevitably lead to higher debt levels. Already, we note that COSCO has had negative  operating cash-flows for the past three years (FY09-11).

In the last  quarter, it also increased its net debt by S$237m (or 29.2% QoQ) to  fund its shipyard operations.