Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
| Research House: DMG | Price Call: HOLD | Target Price: 0.95 |
OSK-DMG is neutral on news Yangzijiang landed a US$170 million ($207 million) jackup rig contract with an option for an additional unit and an LOI for an SSP unit, which is a form of FPSO.
“The rig contract is not a surprise as management guided that they are looking to close two jackup orders by the end of the year. While the jackup order should generate some excitement for the stock, the shipyard could experience a steep learning curve as this will be YZJ’s first rig project. Moreover, the price of the jackup appears on the low end of recent orders for similar design rigs and we believe margins may not be attractive.”
It notes the unit pricing is significantly below a US$227 million order secured by Lamprell for a similar unit in May. It adds, the LOI’s risk lies in execution of the design as the SSP will be the first such unit globally; it notes no contract value was disclosed. It rates the stock Neutral with $0.95 target. It expects YZJ to post minus-20% FY11-14 EPS CAGR.
The stock is down 1.6% at $0.91.
No comments:
Post a Comment