Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Kim Eng Research in a Sept 12 research report says: "Operationally, YZJ is sitting on a comfortable order book of US$5.5 billion, which will keep its yards busy till 2013. YZJ is recognised for its execution track record and leadership in cost control.
"However, we are increasingly negative on the shipbuilding outlook in general with heightened risks of a prolonged downcycle especially if the global economy goes into a deep recession. YZJ recently acquired a 31.5% equity stake in Wuxi Runyuan Technology Microfinance Co. Ltd for a total cost of RMB94.5 million.
"Following a sharp de-rating of Chinese shipbuilders, we are cutting our P/E multiple for the group's shipyard business from 12x to 8x, pegged to itssector peers. Accordingly, our target price has been lowered to $1.15 (from $1.65 previously), and is still based on SOTP valuation. DOWNGRADE TO HOLD."
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
| Research House: Kim Eng | Price Call: HOLD | Target Price: 1.15 |
Kim Eng Research in a Sept 12 research report says: "Operationally, YZJ is sitting on a comfortable order book of US$5.5 billion, which will keep its yards busy till 2013. YZJ is recognised for its execution track record and leadership in cost control.
"However, we are increasingly negative on the shipbuilding outlook in general with heightened risks of a prolonged downcycle especially if the global economy goes into a deep recession. YZJ recently acquired a 31.5% equity stake in Wuxi Runyuan Technology Microfinance Co. Ltd for a total cost of RMB94.5 million.
"Following a sharp de-rating of Chinese shipbuilders, we are cutting our P/E multiple for the group's shipyard business from 12x to 8x, pegged to itssector peers. Accordingly, our target price has been lowered to $1.15 (from $1.65 previously), and is still based on SOTP valuation. DOWNGRADE TO HOLD."
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