Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: Nomura
“We believe YZJ is undervalued on an SOTP basis and the market has under-appreciated the potential of a around US$1 billion ($1.27 billion) containership order (ten 10,000-TEU containerships that YZJ is discussing with an European shipowner).”
It adds “although the market does not appear to favour management’s diversification strategy (plans to invest in property development), we believe the current share price (down 12% from its recent peak vs the STI’s 9.5% fall) presents an attractive entry level, with 27% potential upside as implied by our price target.”
The house notes diversification and growing cash management activities are intended to mitigate an expected earnings decline in 2013 after YZJ’s high-margin orders are delivered over 2011-12. The stock is down 1.1% at $1.80.
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: Nomura
Nomura reiterates its Buy call on Yangzijiang Shipbuilding (BS6.SG), tweaking its target to $2.30 from $2.22. It says despite a robust 4Q10, which was followed by a 9% consensus EPS upgrade, the stock has underperformed the broader market by some 4% since the results as investor concerns mount over its diversification plans and growing investment income.
“We believe YZJ is undervalued on an SOTP basis and the market has under-appreciated the potential of a around US$1 billion ($1.27 billion) containership order (ten 10,000-TEU containerships that YZJ is discussing with an European shipowner).”
It adds “although the market does not appear to favour management’s diversification strategy (plans to invest in property development), we believe the current share price (down 12% from its recent peak vs the STI’s 9.5% fall) presents an attractive entry level, with 27% potential upside as implied by our price target.”
The house notes diversification and growing cash management activities are intended to mitigate an expected earnings decline in 2013 after YZJ’s high-margin orders are delivered over 2011-12. The stock is down 1.1% at $1.80.
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