Yangzijiang - HSBC raises Yangzijiang target to $1.90

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: HSBC

HSBC raises Yangzijiang Shipbuilding (BS6.SG) target to $1.90 from $1.20, says Dow Jones.



Says new orders have rebounded to US$1.3 billion ($1.7 billion) year to date from US$460 million trough in 2009, while shipping firms signalling improving outlook, some ports have recorded sharp on-year rises in container throughput. 

Tips Yangzijiang to achieve another earnings peak in 2011, “with the company well positioned to capitalise on any potential revival in containership orders.” However, says recovery largely priced in; notes share price +49% from year-to-date low in May. “This adequately factors in the moderate cyclical recovery in new orders and earnings growth expected in 2011.” 

Adds, stock also fairly valued vs peers at 2011E EV/EBITDA of 10.3X, modestly lower vs Chinese shipbuilders’ average 11.1X, significantly higher vs Korean average of 6.1X. Says recent Taiwan Depository Receipt (TDR) listing may provide some re-rating impetus to primary Singapore listing, "but past TDRs have seen mixed results and we believe the impact will likely be modest." 

Keeps Neutral call. Shares +2.1% at $1.91.