China Shipping Development shares jumped nearly 15 percent on Wednesday after it reported better-than-expected contract freight rates for 2009 and announced plans to launch a LNG joint venture.
The energy and iron ore shipper said earlier in the day that it would shortly sign an agreement with the parent of PetroChina to set up a $5 million joint venture to ship liquefied natural gas (LNG).
"We are positive on the long-term value from the LNG business, which, by industry standards, could generate an IRR (internal rate of return) at about 12 percent," Morgan Stanley said in a research note on Wednesday.
The company also said late on Tuesday that its average freight rate for domestic coastal bulk cargo contracts dropped nearly 40 percent in 2009, following plummeting global freight rates.
The Baltic Exchange's main sea freight index .BADI plunged more than 90 percent in 2008, before a gradual recovery began in February. The index had bounced back to 2,298 points as of Tuesday.
The average contracted rate is better than the market's estimate of a 40-50 percent cut and above the 65 percent decline in the CCBFI-coal indices, which represent the spot rate for the domestic coal shipping market, Morgan Stanley said.
The stock hit a high of HK$7.25 before settling at HK$6.96, up 10 percent in early trade. It has lost 9.6 percent of its market value this year, close to a 10 percent drop on the index for major Chinese companies listed in Hong Kong .HSCE.
But UBS analyst Richard Wei said the company was facing a deep downturn in 2009 and estimated its coal business's gross margin would fall to 28 percent in 2009 from 52 percent in 2008.
"The average freight rate is largely in line with our expectation and the LNG joint venture will not see contribution in the next three years," Wei said.
He put the target price for the stock at HK$7.16.
The energy and iron ore shipper said earlier in the day that it would shortly sign an agreement with the parent of PetroChina to set up a $5 million joint venture to ship liquefied natural gas (LNG).
"We are positive on the long-term value from the LNG business, which, by industry standards, could generate an IRR (internal rate of return) at about 12 percent," Morgan Stanley said in a research note on Wednesday.
The company also said late on Tuesday that its average freight rate for domestic coastal bulk cargo contracts dropped nearly 40 percent in 2009, following plummeting global freight rates.
The Baltic Exchange's main sea freight index .BADI plunged more than 90 percent in 2008, before a gradual recovery began in February. The index had bounced back to 2,298 points as of Tuesday.
The average contracted rate is better than the market's estimate of a 40-50 percent cut and above the 65 percent decline in the CCBFI-coal indices, which represent the spot rate for the domestic coal shipping market, Morgan Stanley said.
The stock hit a high of HK$7.25 before settling at HK$6.96, up 10 percent in early trade. It has lost 9.6 percent of its market value this year, close to a 10 percent drop on the index for major Chinese companies listed in Hong Kong .HSCE.
But UBS analyst Richard Wei said the company was facing a deep downturn in 2009 and estimated its coal business's gross margin would fall to 28 percent in 2009 from 52 percent in 2008.
"The average freight rate is largely in line with our expectation and the LNG joint venture will not see contribution in the next three years," Wei said.
He put the target price for the stock at HK$7.16.