Here’s why Cosco’s US$7.9b gross orderbook isn’t what it sounds like

It’s shaping up to be a double-edged sword.

After emerging from its restructuring deal empty-handed, it seems obvious that Cosco could still turn towards its hefty gross orderbook. However, analysts say a stacked orderbook might not necessarily mean good news for Cosco.

According to analysts from DBS, the shipbuilding contracts on its orderbook are of low value, while Cosco’s offshore segment continues to struggle with its diversified product range.

“Making things worse, its O&G customers are delaying rig deliveries in view of the lacklustre chartering market,” DBS said.

Adding salt to the wound, the company is also dealing with lingering concerns over its drillship and cylindrical rig sagas.

“Given the weak market sentiment and abundant supply of new drilling rigs, it will be challenging for Cosco to conclude the sale of the cancelled drillship unit,” DBS said.

“Meanwhile, the 4th Sevan cylindrical rig unit, which is near completion, faces risk of cancellation as the customer has failed to secure a charter contract and Cosco is held responsible for the delivery delay,” they added.