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Shipbuilder Lures Wave Of Investors
2007/12/20 11:19
SINCE GETTING LISTED in Singapore in April, China-based Yangzijiang Shipbuilding (Holdings) has drawn a wave of investors as a play on the hot Chinese economy and boom-times in the business. Next month, its shares join a revamped Straits Times Index, which could boost long-term interest in the company.
Yangzijiang certainly hasn't been immune to a broad market selloff, sparked by U.S. economic jitters, that has hit Singapore's China stocks hard. Yesterday, the share-price slid 3.1% to S$1.85 (US$1.27). That is 32% below its S$2.74 peak close on Oct. 18.
With that tumble, many analysts think Yangzijiang is attractively valued. They say its ratio of 2008 price-earnings level to earnings growth is lower than that of Singapore-listed peer Cosco Corp. (Singapore), a unit of giant China Ocean Shipping Group. And they like the fundamentals of Yangzijiang, China's largest nonstate-run shipbuilder by order book.
Last month, the company reported a 68% rise in third-quarter net profit from a year earlier to 224.7 million yuan (US$30.4 million) -- 30% above DBS Vickers's expectation. During November, according to the company, it secured US$204 million of contracts in November, taking its order book to US$5.7 billion.
'With these new orders, they have visibility until 2011 in terms of revenue,' says DBS Vickers analyst Ho Pei Hwa, who has a 'buy' and a S$3.04 12-month price target on the stock.
Of course, there isn't visibility on the global economy, and any substantial economic slowdown would affect shipbuilders. But many analysts believe that with a continuing shortage of vessels, shipyards should stay busy in coming years.
Like many shipbuilders, Yangzijiang is expanding to meet surging demand for carriers of fuel and raw materials, partly driven by China. Ship operators, keen to make the most of the robust freight rate environment, are ordering vessels they will receive years from now.
Yangzijiang, founded more than 50 years ago, picked Singapore to list in part because it is a center for marine stocks. The company offered shares on Singapore's second board at 95 Singapore cents each. At yesterday's close, the stock is 38% above its level on April 18, its first day of trading. Over the same period, the Straits Times Index has declined 1.3%.
Now, the Singapore stock market is relaunching its main benchmark, the Straits Times Index, to boost credibility with global investors, through a switch to the FTSE's selection criteria. The new index, which kicks off Jan. 10, will comprise 30 leading blue-chip companies ranked by market capitalization; Yangzijiang's market cap is about S$4 billion. The same day will see the debut of the FTSE ST China index, a China-play index made up of companies listed in Singapore that have a significant proportion of Chinese ownership.
'Some funds track whatever goes into the benchmark indices,' says fund manager Nicholas Yeo at Aberdeen Asset Management.
As part of the new FTSE ST China index, Yangzijiang could also attract from China's Qualified Domestic Institutional Investor funds, which can invest in certain overseas-listed companies.
'If QDII funds do flow into Singapore, they will probably end up in larger, more liquid stocks like Yangzijiang,' says Credit Suisse analyst Haider Ali, who on Nov. 30 began coverage of Yangzijiang with an 'outperform' rating and a 12-month target of S$2.45.
Mr. Yeo says the index's inclusion of Yangzijiang 'will provide initial interest, but it's about the fundamentals after that.'
Based on Credit Suisse forecasts, Yangzijiang trades at 18 times its projected 2008 earnings, while Cosco is about 21 times and Keppel Corp. of Singapore, which has more rig-building than shipbuilding intrests, 13.5 times. Credit Suisse expects Yangzijiang's earnings to more than double next year, while Cosco's would increase 86% and those of Keppel rise 15%.
With its big order book, Yangzijiang will be under pressure to handle a steep ramp-up in deliveries. There are also risks outside the company's control, such as raw-materials prices, particularly for steel. But analysts say these should be manageable.
Mr. Ali expects that the recent launch of a new yard in the Chinese city of Jingjiang in Jiangsu province, funded with the proceeds of the initial public offering, will further bolster Yangzijiang's order book. 'Essentially they have been getting most orders in the container segment. Now, with the new yard, they will get bulk orders too,' he predicts.
The new yard has 1,200 meters of deepwater coastline, compared with 719 meters at the company's original shipyard in Jiangyin, China. The yard was completed in October, four months ahead of schedule, something that UBS analyst Hubert Tang sees as a coup for the company.
'In view of the current shopping spree by ship owners and operators, we believe this is a particularly positive development,' he says. Mr. Tang has a 'buy' on the shares and has raised his 12-month target price to S$2.80 from S$2.43 on anticipation of higher profit margins and more ship deliveries.
The new yard will let Yangzijiang add deliveries for 2009 and 2010. Those are ships for which the company should be able to charge a big premium, given the current tightness in the shipping market.
Kirsty Green
SINCE GETTING LISTED in Singapore in April, China-based Yangzijiang Shipbuilding (Holdings) has drawn a wave of investors as a play on the hot Chinese economy and boom-times in the business. Next month, its shares join a revamped Straits Times Index, which could boost long-term interest in the company.
Yangzijiang certainly hasn't been immune to a broad market selloff, sparked by U.S. economic jitters, that has hit Singapore's China stocks hard. Yesterday, the share-price slid 3.1% to S$1.85 (US$1.27). That is 32% below its S$2.74 peak close on Oct. 18.
With that tumble, many analysts think Yangzijiang is attractively valued. They say its ratio of 2008 price-earnings level to earnings growth is lower than that of Singapore-listed peer Cosco Corp. (Singapore), a unit of giant China Ocean Shipping Group. And they like the fundamentals of Yangzijiang, China's largest nonstate-run shipbuilder by order book.
Last month, the company reported a 68% rise in third-quarter net profit from a year earlier to 224.7 million yuan (US$30.4 million) -- 30% above DBS Vickers's expectation. During November, according to the company, it secured US$204 million of contracts in November, taking its order book to US$5.7 billion.
'With these new orders, they have visibility until 2011 in terms of revenue,' says DBS Vickers analyst Ho Pei Hwa, who has a 'buy' and a S$3.04 12-month price target on the stock.
Of course, there isn't visibility on the global economy, and any substantial economic slowdown would affect shipbuilders. But many analysts believe that with a continuing shortage of vessels, shipyards should stay busy in coming years.
Like many shipbuilders, Yangzijiang is expanding to meet surging demand for carriers of fuel and raw materials, partly driven by China. Ship operators, keen to make the most of the robust freight rate environment, are ordering vessels they will receive years from now.
Yangzijiang, founded more than 50 years ago, picked Singapore to list in part because it is a center for marine stocks. The company offered shares on Singapore's second board at 95 Singapore cents each. At yesterday's close, the stock is 38% above its level on April 18, its first day of trading. Over the same period, the Straits Times Index has declined 1.3%.
Now, the Singapore stock market is relaunching its main benchmark, the Straits Times Index, to boost credibility with global investors, through a switch to the FTSE's selection criteria. The new index, which kicks off Jan. 10, will comprise 30 leading blue-chip companies ranked by market capitalization; Yangzijiang's market cap is about S$4 billion. The same day will see the debut of the FTSE ST China index, a China-play index made up of companies listed in Singapore that have a significant proportion of Chinese ownership.
'Some funds track whatever goes into the benchmark indices,' says fund manager Nicholas Yeo at Aberdeen Asset Management.
As part of the new FTSE ST China index, Yangzijiang could also attract from China's Qualified Domestic Institutional Investor funds, which can invest in certain overseas-listed companies.
'If QDII funds do flow into Singapore, they will probably end up in larger, more liquid stocks like Yangzijiang,' says Credit Suisse analyst Haider Ali, who on Nov. 30 began coverage of Yangzijiang with an 'outperform' rating and a 12-month target of S$2.45.
Mr. Yeo says the index's inclusion of Yangzijiang 'will provide initial interest, but it's about the fundamentals after that.'
Based on Credit Suisse forecasts, Yangzijiang trades at 18 times its projected 2008 earnings, while Cosco is about 21 times and Keppel Corp. of Singapore, which has more rig-building than shipbuilding intrests, 13.5 times. Credit Suisse expects Yangzijiang's earnings to more than double next year, while Cosco's would increase 86% and those of Keppel rise 15%.
With its big order book, Yangzijiang will be under pressure to handle a steep ramp-up in deliveries. There are also risks outside the company's control, such as raw-materials prices, particularly for steel. But analysts say these should be manageable.
Mr. Ali expects that the recent launch of a new yard in the Chinese city of Jingjiang in Jiangsu province, funded with the proceeds of the initial public offering, will further bolster Yangzijiang's order book. 'Essentially they have been getting most orders in the container segment. Now, with the new yard, they will get bulk orders too,' he predicts.
The new yard has 1,200 meters of deepwater coastline, compared with 719 meters at the company's original shipyard in Jiangyin, China. The yard was completed in October, four months ahead of schedule, something that UBS analyst Hubert Tang sees as a coup for the company.
'In view of the current shopping spree by ship owners and operators, we believe this is a particularly positive development,' he says. Mr. Tang has a 'buy' on the shares and has raised his 12-month target price to S$2.80 from S$2.43 on anticipation of higher profit margins and more ship deliveries.
The new yard will let Yangzijiang add deliveries for 2009 and 2010. Those are ships for which the company should be able to charge a big premium, given the current tightness in the shipping market.
Kirsty Green
Thanks :) Hope i can contribute to the wide variety of analysis here ..
Kay,
i checked out your blog. good job for a student engineer.
cheers!
There was a tweezer bottoms formed during the previous correction at
$1.86. Today, it closed at $1.85 and it kinda breaches the support.
Since, it only differs by 1 bid, maybe this is a whipsaw technically.
If by friday, it still can't climb back, i think it will head south. U can take a look at the chart i created @ here.
yap... big brothers / insituitational players like it when people cant hold for mid / long term...
They would buy at lower price and sell / consolidate...
Sell Sell Sell
true, big brothers like to make the prices fluctuate at big ranges and close down..
testing lower low. along with its tandem, yanlord. not good. if break 1.8, next support is the 1.50s level. be careful, beautiful retailers trap set up today: random large buys which induced buy ups by small fries, followed by large throws.
not vested.
market is myopia which is good for mid-long term players.. for short terms / day trade players would be exciting...
Cheers...
hi limhpp Senior,
According to fundamentals, this stock is very attractive in value PE 15 and below and high EPS for top 30 SG blue chip.. But due to subprime and china markets correcting for past 1 months plus, so this stock very unstable.
Btw, noticed bb or insituititional players bought lots of share (each time about 1.5millions in value) at 1.86-1.88 range,Today is trading at huge volumes, but big brothers are playing... there might be a rebound soon or some groups playing up.
Now is worst fear time...
When fear is greatest, might be time to go in carefully...
Cheers...
Happy
With my limited knowledge, i've posted some views on this counter @ www.bear-analysis.blogspot.com.
Let me know your thoughts on ym views too =)
There seem to be support today at around 1.90 and closed up. Think it is still going downtrend ?
Anyone think there will be a rebound soon?????
yes,
at this moment this level is dangerous for both long and shortist. Just watch for the story to unfold.
Yangzijiang seems to be swimming downwards through technical analysis
Sorry guys, typo err, it shd be
| Technicals | |||||
| RSI | 40.54 | Williams %R | -89.66 | ||
| Comments (RSI) | No Info | Comments (W%R) | Oversold | ||
Seems the players are accumulating at 1.89-1.91 today, and graph shows
OB of -90+%
What u guys think of tomorrow's ? still keeping my $2.00 lots. maybe thought to balance up some more.. shd be gng up liao la
Mati liao like that...
Support is a base trendline that stock price suppose to rebound upon touching it. If Support line is broken, there might be more downside. YZJ had breached the 2.01 support line "convincely", which make me feel that the days ahead is a downtrend. Next support is at 1.76-1.78.
Looks like all China related shares are falling real fast today.
Beware!