Yangzijiang remains profitable amid industry turmoil, reports RMB811.7 million in earnings for 2Q2013

Yangzijiang

Yangzijiang remains profitable amid industry turmoil, reports RMB811.7 million in earnings for 2Q2013




 Group revenue increased 12% in 2Q2013 mainly due to higher revenue recognition from construction of larger vessels



 Healthy gross profit margin of 27% core shipbuilding margin remains strong at 21%



 Strong order book momentum despite weak shipbuilding industry, US$1.0 billion worth of newbuild contracts secured in 1H2013



 Outstanding order book comprised of 71 vessels worth US$3.24 billion



SINGAPORE – 7 August 2013 – Yangzijiang Shipbuilding (Holdings) Limited



http://infopub.sgx.com/FileOpen/PressRelease_2Q2013_Eng_Final.ashx?App=Announcement& FileID=251255



(" Yangzijiang" or " the Group" or " 扬 子 江 船 业 控 股 有 限 公 司 " ), one of PRC’s leading and most enterprising shipbuilder listed on the SGX Main Board, reported net profit attributable to shareholders of RMB811.7 million for the three months ended 30 June



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Yangzijiang: 2Q13 results fell yoy, but came in above Bloomberg consensus estimates.



Net profit at Rmb 812m, -8% yoy, mainly due to lower gross margins, higher tax and FX loss on contracts done in euros.



Gross margins fell to 27.5% from 30.5%. In particular, shipbuilding margins were the drag, declining to 21% (1Q13: 26%, 2Q12: 24%).



Revenue came in at Rmb 4,422m +12% yoy, due to higher revenue recognition from construction and delivery of large vessels during the quarter.



This was despite a lower 11 vessels being delivered during the quarter, from 15 deliveries in 2Q12.



Meanwhile interest income derived from HTM financial assets rose 20% yoy to Rmb 360m, due to a steady increase in investments in HTM financial assets.



Although investment income from the micro financing business dropped 32% to $22.5m, due to the lower loan amount extended. As at end Jun, the group’s latest shipbuilding orderbook stands at 71 vessels with total value of US$3.24b.



In 1H13, the group secured a total of 27 effective shipbuilding contracts with an aggregate value of US$1.01b. in addition, a further 4 options for bulk carrier vessels worth a combined US$103.7m, were converted into effective orders in Jul ’13.



The group now has remaining 47 options (22 containerships, 25 multi-purpose bulk carriers) worth US$2.54b. Mgt notes that while the industry downturn may have a prolonger impact, stretching beyond 2013, its steady invmts in HTM assets will provide the group with a comfortable cushion.



Mgt remains confident of the group’s performance for FY13.



YZJ is among companies diversifying into offshore drilling and pdtn as demand for vessels decline.



YZJ will embark on a key milestone - construction of its first jack up rig in Aug ’13, scheduled for delivery in mid 2015.



At last close of $0.925, Yangzijiang trades at 5.3x annualized 2Q13 P/E, 1.06x P/B.