Kim Eng cuts Yangzijiang to hold from buy

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: Kim Eng

Price Call: HOLD

Target Price: 1.15

Kim Eng Securities has downgraded Singapore-listed Chinese shipbuilder Yangzijiang (YAZG.SI) to hold from buy as it turns more negative on the shipping industry due to weakness in the global economy.

The broker also cut its target price for the stock to $1.15 from $1.65.

Kim Eng has turned more negative on its outlook for the shipping industry due to rising global economic uncertainties, and noted that Yangzijiang may have to offer longer vessel delivery schedules to existing buyers to avoid order cancellations.

“We are increasingly negative on the shipbuilding outlook in general with heightened risks of prolonged downcycle especially if global economy goes into a deep recession,” said Kim Eng in a report. 

Investors are also increasingly concerned about Yangzijiang's growing investments in its non-core financing business, the brokerage said.

At 12:01 p.m., shares of Yangzijiang fell 2.4% to $1.025, and have dropped about 46% since the start of the year.