About 90% of Yangzijiang's revenue is from shipbuilding, but it is diversifying into offshore engineering and other businesses. Company photo
As Yangzijiang enters its most trying times between 2H13 to 1H14 when its shipbuilding orderbook gets depleted, it has maintained its rationality in the shipbuilding business, refusing to take any orders that are loss making.
“Instead of using aggressive pricing to secure jobs, it instead sought to counter the downturn through the micro-financing business and investments in held-to-maturity assets. This did not go down entirely well with many investors but has kept the company afloat.
“YZJ has one of the strongest balance sheets and has good track record for execution.
”It recently secured a batch of new orders worth USD414 million, bringing YTD order wins to about USD1.01 billion. It still has 51 options worth USD2.64b outstanding.
”Valuations are already at a low among the Chinese shipbuilders, and we do not see much downside from here even if the sector de-rates. However sector weakness will mean that the stock price would continue to be range bound.
“Maintain Hold and SOTP-based target price of SGD0.93. Implied P/B is 1.0x.”
Yangzijiang is expected to announce its results on 7 Aug.
No comments:
Post a Comment