Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Yangzijiang Shipbuilding (Holdings) (YZJ SP) BUY
Price/Tgt: S$0.95/1.52 Mkt Cap: S$3.6b Daily Vol: S$12.3m 1-Yr Hi/Lo: S$1.42/0.855
3Q12 earnings decline 14% yoy on margin contraction
What is new?
Yangzijiang Shipbuilding (Holdlings) announced 3Q12 results. Revenue was Rmb3611.9m (-1% yoy), of which shipbuilding revenue was 3,306.5m (-4% yoy). Overall gross margin (including investment business) contracted to 29% from 3Q11's 32% due primarily to higher percentage of high margin investment business within revenue, within which shipbuilding margin declined to 23% from 3Q11's 28%. Net income was Rm877.2m (-14% yoy) includes interest incomes of Rmb304m generated from financial products, cash and Runyuan micro financing (3Q11: Rmb202m, 2Q12: Rmb307m).
No order secured in 3Q12 and oderbook declined to 75 vessels with a total value of US$3.6b.
In addition, YZJ and Huaxi Property Development established a JV to develop the land where the old yard is located. We expect the project will contribute revenue since 2015 onwards.
Our view
Maintain BUY on YZJ and maintain target price to S$1.52, based on 10x 2013F P/E. As a shipyard with adequate cash, we put YZJ as our top pick with Chinese shipyards sector amid an industry downturn.
Regards,
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
| Research House: UOB KayHian | Price Call: BUY | Target Price: 1.52 |
Yangzijiang Shipbuilding (Holdings) (YZJ SP) BUY
Price/Tgt: S$0.95/1.52 Mkt Cap: S$3.6b Daily Vol: S$12.3m 1-Yr Hi/Lo: S$1.42/0.855
3Q12 earnings decline 14% yoy on margin contraction
What is new?
Yangzijiang Shipbuilding (Holdlings) announced 3Q12 results. Revenue was Rmb3611.9m (-1% yoy), of which shipbuilding revenue was 3,306.5m (-4% yoy). Overall gross margin (including investment business) contracted to 29% from 3Q11's 32% due primarily to higher percentage of high margin investment business within revenue, within which shipbuilding margin declined to 23% from 3Q11's 28%. Net income was Rm877.2m (-14% yoy) includes interest incomes of Rmb304m generated from financial products, cash and Runyuan micro financing (3Q11: Rmb202m, 2Q12: Rmb307m).
No order secured in 3Q12 and oderbook declined to 75 vessels with a total value of US$3.6b.
In addition, YZJ and Huaxi Property Development established a JV to develop the land where the old yard is located. We expect the project will contribute revenue since 2015 onwards.
Our view
Maintain BUY on YZJ and maintain target price to S$1.52, based on 10x 2013F P/E. As a shipyard with adequate cash, we put YZJ as our top pick with Chinese shipyards sector amid an industry downturn.
Regards,
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