Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: Citigroup
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: Citigroup
Citigroup initiates coverage on Yangzijiang (BS6.SG) with Buy rating, $2.25 target price, based on 13X FY11 P/E, says Dow Jones.
Says China-based shipbuilder’s strong execution track record insulates it from industry headwinds; notes it has US$5 billion ($6.53 billion) order backlog, 5th largest among Chinese yards. Forecasts EPS CAGR of 13% over 2010-2012. Says strong balance sheet, with CNY3.5 billion in net cash, enables Yangzijiang to pursue acquisitions.
Says China-based shipbuilder’s strong execution track record insulates it from industry headwinds; notes it has US$5 billion ($6.53 billion) order backlog, 5th largest among Chinese yards. Forecasts EPS CAGR of 13% over 2010-2012. Says strong balance sheet, with CNY3.5 billion in net cash, enables Yangzijiang to pursue acquisitions.
Adds company taking advantage of government support in current industry downturn to expand capacity at low cost; “apart from shipbuilding, capacity can also be used for other purposes including repair, conversion and scrapping.”
Notes company also venturing into ship-breaking business to help offset earnings volatility; “such a venture also provides a natural hedge to potential steel price volatility.”
Shares end down 0.5% at $1.87.
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