The stock is struggling to set sail....but the crew and ship quality look great.
DBS Vickers has this latest update on its view:
"Yangzijiang has secured US$206m new orders YTD. We expect order wins to translate into firm orders in 2H. Current order book is healthy at 96 vessels worth US$4.5bn, translating to a healthy book-to-bill ratio of 1.8x. Offshore plans in progress. We continue to like Yangzijiang as one of the most well run Chinese shipyards. Target price $1.55"
DBS Vickers' target price of S$1.55 is looking too ambitious. YZJ is going south, lost 33% in 2 months, because of concern over their European customers and, to some extent, China's slow economy. I would get ready to buy YZJ at 88 cents. Not too far away from the current 93 cents.
I 88, you 77 .... the market price 99 cents now.
LOL
Who says the market obeys our wishes?
[hr]
[peterlynch 19-05-2012]:
why 88 cents? actually i am waiting for 77 cents
Credit Suisse hosted lunch with SS Teo, Chairman of Singapore's second largest (and the world's 19th largest) liner company Pacific International Line (unlisted), where he shared his thoughts on rates, profitability and newbuilding opportunities.
¡ö Mr Teo believes that more Chinese yards may face financial difficulties this downturn vs in 08-09, with several small to mid sized yards already facing cash flow problems. At the same time, some orders may get cancelled as newbuild prices have declined by more than 50% from the peak. Ship financing remains challenging as European banks become more selective in their lending, while Chinese banks have not stepped in to fill the gap.
¡ö In terms of newbuilding opportunities, Mr Teo noted that the company could be looking to upgrade its fleet to newer designs with higher energy efficiency. This is in line with our view that shipowners with a less efficient fleet could be in a sustained competitive disadvantage.
¡ö We remain cautious on the Chinese shipbuilders, with a preference for Yangzijiang over Cosco Corp due to its technology in fuel efficient vessels, re-rating potential from entry into the offshore segment, and attractive valuation at 1.2x P/B.
Cosco Corp has the highest order book exposure to Greece and Europe at more than 60% of
order book. 28% of its order book comes from financially vulnerable Norwegian customer Sevan Drilling, 22% from China and 19% from Greece.
Only 1/3 of its customers are Asian-based.
Yangijizang is the least affected among Chinese yards as Greek customers account for only 1% of its total order book; Chinese customers form the largest base at 41%, followed by Germany 22% and Canada 18%.
NextInsight
a hub for serious investors
