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From Kim Eng:
Lunch Bites - Chinese shipyards on the rebound
Aiming to be No.1 – The outlook for the Chinese shipyards has improved significantly with a recovery in the bulk shipping sector, as evidenced by a 63% rise in the Baltic Dry Index in the past three months. This has also translated to a pickup in new orders and enquiries for bulk carriers, the current mainstay of these shipyards. Cosco has progressively reported improving execution on its problematic backlog of bulk carrier newbuilding orderbook, and we expect this to be reflected in its 3Q results due on 3 November.
Yangzijiang, too, recently announced a steady set of 3Q numbers, and it disclosed this morning a strategic tie-up with Taiwanese shipbuilder CSBC. JES, which has been a serious laggard due to its own execution issues in the past, has staged a sharp recovery as well. We expect continued interest and more positive re-ratings for this group of stocks. Short-term prospects should be bolstered by more new orders, but the longer-term view is also positive as China aims to become the largest global shipbuilder by 2015, with the government facilitating the transformation via supportive policies such as VAT refunds and favourable financing arrangements through domestic financial institutions. The objective is to also extend its breadth of capability beyond its mainstay of bulkers into others such as containerships and offshore. Cosco, with its expanding range of capabilities, should be the prime beneficiary, in our opinion.
Lunch Bites - Chinese shipyards on the rebound
Aiming to be No.1 – The outlook for the Chinese shipyards has improved significantly with a recovery in the bulk shipping sector, as evidenced by a 63% rise in the Baltic Dry Index in the past three months. This has also translated to a pickup in new orders and enquiries for bulk carriers, the current mainstay of these shipyards. Cosco has progressively reported improving execution on its problematic backlog of bulk carrier newbuilding orderbook, and we expect this to be reflected in its 3Q results due on 3 November.
Yangzijiang, too, recently announced a steady set of 3Q numbers, and it disclosed this morning a strategic tie-up with Taiwanese shipbuilder CSBC. JES, which has been a serious laggard due to its own execution issues in the past, has staged a sharp recovery as well. We expect continued interest and more positive re-ratings for this group of stocks. Short-term prospects should be bolstered by more new orders, but the longer-term view is also positive as China aims to become the largest global shipbuilder by 2015, with the government facilitating the transformation via supportive policies such as VAT refunds and favourable financing arrangements through domestic financial institutions. The objective is to also extend its breadth of capability beyond its mainstay of bulkers into others such as containerships and offshore. Cosco, with its expanding range of capabilities, should be the prime beneficiary, in our opinion.
drop 4 cents. dunno why ?
kiasiDBT ( Date: 28-Oct-2010 07:56) Posted:
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YZJ To Build Cargo Freighters With CSBC
Taipei - Taiwan's China Shipbuilding Corp (CSBC) and China's Yangzijiang Shipbuilding Holding Ltd agreed Wednesday to build cargo ships together.
CSBC chairman Cheng Wen-lon and Yangzijiang chairman Ren Yuanlin signed the agreement at CSBC headquarters in Kaohsiung in southern Taiwan.
Under the pact, the companies would jointly build freighters for Taiwan, Chinese and international clients with CSBC supplying the designs and Yangzijiang providing the manpower and shipyards.
CSBC is Taiwan's largest shipbuilder with two shipyards. It has received enough orders from domestic and foreign shipping lines to keep it busy until 2013.
Yangzijiang, based in east-central China's Jiangsu province, is China's second-largest private shipbuilder.
Taiwan media reported that CSBC and Yangzijiang's agreement was aimed at winning international orders.
From Investor Central:
EARNINGS AT A GLANCE
Q3 Revenue: +19% to RMB 3.08 bln
Net Profit: +33% to RMB 554.3 mln
Cash From Operations: RMB 1.75 bln vs RMB 495.3 mln
EARNINGS COMMENTARY
Yangzijiang’s revenue rose due mainly to the production ramp up in its new yard resulting in more vessels delivered. Its new yard delivered seven vessels in Q3 2010 compared to four in Q3 2009. On the overall, it delivered 14 vessels on schedule, as compared to seven vessels the previous year.
Gross profit margin rose to 24% due to higher margin from construction and delivery of shipbuilding contracts secured prior to the financial crisis. The group managed to keep all those shipbuilding contracts intact without any cancellation during the crisis.
OUTLOOK
The board is confident of delivering continued growth and profitability for 2010.
~INVESTOR CENTRAL’S TAKE~
Yangzijiang’s current ratios (by Reuters):
P/E: 16.10x
P/B: 6.22x
Free cashflow for FY2009: RMB 1.77 bln vs RMB 1.69 bln
REUTERS CONSENSUS FORECAST
[color=red][u][b]Analysts surveyed by Reuters have on average an OUTPERFORM call on the stock with a price target of RMB 10.05, compared to its last traded price of S$1.96. [/b][/u][/color]
As always, please see your licensed financial advisor before making any investment decisions.
What caused the uncharacteristic plunge of 7c? Cashing out? Cant be, right?
always follow the opposite of CIMB calls...
>> ANNOUNCEMENT DETAILS
displayAttachments_LN::<Table><TR><TD
class='attachmentMsg'><img src=/icons/vwicn005.gif>
<a href=&http://quot;#"
onclick="spawnWin('3CA117D3460184B0482577C9001C85F8/$file/Announcement20101027.pdf');">Announcement20101027.pdf</a></TD></TR></Table>
displayAttachmentsLength_LN::<FONT SIZE=1 COLOR=#104160 FACE=Verdana>Total size = </FONT><B><FONT SIZE=1 COLOR=#104160 FACE=Verdana>148K</FONT></B><BR><FONT SIZE=1 COLOR=#104160 FACE=Verdana>(2048K size limit recommended)</FONT>
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I've held this counter since it was $1.39. Just on pure technical alone, it may have further downside till $1.73.
Technical factors:
1). Latest run up from 25-May-2010 (lowest $1.200) till 21-Oct-2010 (highest $2.010). Fibonacci retracement of 23.6% $1.85 very nearly hit today (27-Oct-2010 lowest $1.86).
2) MACD lines turning downwards with MACD histogram crossing below zero line.
3) Next likely support level at 38.2% fib retracement $1.72. This price level is also between the 50day EMA and 80day EMA, should provide good value for LONG.
Fundamental factor:
1) US mid term elections next week may be lead to overall market weakness till the elections are over.
My take:
1) Hold on till it reaches $1.72 level. If further technicals show more downside (e.g. further break below $1.72, RSI and Stochastics still shows a lot of room to march towards the oversold side), will sell and wait to see if it finds support near $1.62 level.
hello price dropping, inflated by inflow of capital from other part of the world....
be careful...................
kiasiDBT ( Date: 27-Oct-2010 15:53) Posted:
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From CIMB:
Yangzijiang Shipbuilding - Quality shipbuilder
3Q10 post-results briefing
Maintain Outperform.
We attended the company’s analysts’ briefing following the
release of its 3Q10 results.
Our takeaways were:
1) sustainable gross margins into 2011;
2) on track for its delivery targets with upside potential; and
3) higher interest income from financial assets.
We keep our earnings estimates and target price of S$2.15, still based on 12x CY12 P/E.
YZJ is our preferred Chinese shipbuilder for its quality execution and strong financial muscles.
We continue to see catalysts from stronger-than-expected orders and margins.
Takeaways
Gross margins from execution of orders before crisis and improving productivity.
We expect YZJ to keep gross margins above 20% going into 2011 on the back of:
1) the execution of high-value contracts;
2) improved productivity from is new yard; and
3) an upgrade in its technical skills to expand capacity.
High-priced contracts (fetching 20% more than current projects) account for about
65% of YZJ’s order book of US$5.3bn.
On track for 48 deliveries in 2010. Management expects to deliver 12 vessels in
4Q10, meeting its target of 48 for 2010. We believe these could be higher-value vessels
which would boost its revenue recognition in 4Q10. With productivity gains, we believe
YZJ could deliver up to 54 vessels in 2011-12, exceeding its target of 50 vessels p.a.
Higher-than-expected investment income. YZJ booked Rmb203m of interest income
in 3Q10, mainly relating to structured financial assets and cash deposits. YZJ had
Rmb7.9bn of financial assets comprising collateral for bridging loans extended to listed
blue-chip companies in China, listed shares, land titles and investment projects
supported by the Chinese government.
Management hopes to raise investments in financial assets to Rmb10bn in the mid-term
with an average return of 10%. We believe 4Q10 earnings could be lifted by higher interest
income as more financial assets are expected to mature.
YZJ booked Rmb347m of interest income in 4Q09.
Slight glitch in Jiangsu Changbo shipyard. No profits were consolidated in 3Q10
from YZJ’s new subsidiary, Jiangsu Changbo Shipyard. There were also two
cancellations during the quarter for which the yard would be compensated. Changbo’s
order book was US$338m, comprising 20 bulk carriers for delivery up until 2012
Management expects Changbo to turn around in FY12 when YZJ has finished with
integrating and transferring management skills to beef up its operations. We do not
expect material earnings from Changbo in the meantime.
Valuation and recommendation
Maintain Outperform and target price of S$2.15, still based on 12x CY12 P/E. We
believe YZJ offers good value relative to its Chinese peers. It remains our preferred
Chinese shipbuilder for its quality execution and strong financial muscles. We continue
to see catalysts from stronger-than-expected orders and margins.
Yangzijiang Shipbuilding - Quality shipbuilder
3Q10 post-results briefing
Maintain Outperform.
We attended the company’s analysts’ briefing following the
release of its 3Q10 results.
Our takeaways were:
1) sustainable gross margins into 2011;
2) on track for its delivery targets with upside potential; and
3) higher interest income from financial assets.
We keep our earnings estimates and target price of S$2.15, still based on 12x CY12 P/E.
YZJ is our preferred Chinese shipbuilder for its quality execution and strong financial muscles.
We continue to see catalysts from stronger-than-expected orders and margins.
Takeaways
Gross margins from execution of orders before crisis and improving productivity.
We expect YZJ to keep gross margins above 20% going into 2011 on the back of:
1) the execution of high-value contracts;
2) improved productivity from is new yard; and
3) an upgrade in its technical skills to expand capacity.
High-priced contracts (fetching 20% more than current projects) account for about
65% of YZJ’s order book of US$5.3bn.
On track for 48 deliveries in 2010. Management expects to deliver 12 vessels in
4Q10, meeting its target of 48 for 2010. We believe these could be higher-value vessels
which would boost its revenue recognition in 4Q10. With productivity gains, we believe
YZJ could deliver up to 54 vessels in 2011-12, exceeding its target of 50 vessels p.a.
Higher-than-expected investment income. YZJ booked Rmb203m of interest income
in 3Q10, mainly relating to structured financial assets and cash deposits. YZJ had
Rmb7.9bn of financial assets comprising collateral for bridging loans extended to listed
blue-chip companies in China, listed shares, land titles and investment projects
supported by the Chinese government.
Management hopes to raise investments in financial assets to Rmb10bn in the mid-term
with an average return of 10%. We believe 4Q10 earnings could be lifted by higher interest
income as more financial assets are expected to mature.
YZJ booked Rmb347m of interest income in 4Q09.
Slight glitch in Jiangsu Changbo shipyard. No profits were consolidated in 3Q10
from YZJ’s new subsidiary, Jiangsu Changbo Shipyard. There were also two
cancellations during the quarter for which the yard would be compensated. Changbo’s
order book was US$338m, comprising 20 bulk carriers for delivery up until 2012
Management expects Changbo to turn around in FY12 when YZJ has finished with
integrating and transferring management skills to beef up its operations. We do not
expect material earnings from Changbo in the meantime.
Valuation and recommendation
Maintain Outperform and target price of S$2.15, still based on 12x CY12 P/E. We
believe YZJ offers good value relative to its Chinese peers. It remains our preferred
Chinese shipbuilder for its quality execution and strong financial muscles. We continue
to see catalysts from stronger-than-expected orders and margins.
From DBS Sec:
3Q10 results for Yangzijiang better than expected; gross
margin held up at c.23%.
Our analyst has raised FY10-11 forecasts by 3-5% on lower steel cost.
There is ample room for further earnings upgrade.
Maintain BUY, TP raised to S$2.38 (Prev S$ 2.05).
| 15:36 | DowJones | DJ MARKET TALK: CLSA Cuts Yangzijiang To Sell; Take Profit |
| 09:58 | Reuters | RESEARCH ALERT-DMG downgrades Yangzijiang to "neutral" |
nothing much, just that stocks were overbought.
what goes up comes down
tianloong86 ( Date: 27-Oct-2010 14:48) Posted:
|
someone is playing the counter????
whats the real reason for the massive drop these 2 days?
yang got owned today. down 7cents.
From DBS Sec:
3Q10 results for Yangzijiang better than expected; gross
margin held up at c.23%.
Our analyst has raised FY10-11 forecasts by 3-5% on lower steel cost.
There is ample room for further earnings upgrade.
Maintain BUY, TP raised to S$2.38 (Prev S$ 2.05).
From CIMB:
Yangzijiang Shipbuilding - Quality shipbuilder
3Q10 post-results briefing
Maintain Outperform.
We attended the company’s analysts’ briefing following the
release of its 3Q10 results.
Our takeaways were:
1) sustainable gross margins into 2011;
2) on track for its delivery targets with upside potential; and
3) higher interest income from financial assets.
We keep our earnings estimates and target price of S$2.15, still based on 12x CY12 P/E.
YZJ is our preferred Chinese shipbuilder for its quality execution and strong financial muscles.
We continue to see catalysts from stronger-than-expected orders and margins.
Takeaways
Gross margins from execution of orders before crisis and improving productivity.
We expect YZJ to keep gross margins above 20% going into 2011 on the back of:
1) the execution of high-value contracts;
2) improved productivity from is new yard; and
3) an upgrade in its technical skills to expand capacity.
High-priced contracts (fetching 20% more than current projects) account for about
65% of YZJ’s order book of US$5.3bn.
On track for 48 deliveries in 2010. Management expects to deliver 12 vessels in
4Q10, meeting its target of 48 for 2010. We believe these could be higher-value vessels
which would boost its revenue recognition in 4Q10. With productivity gains, we believe
YZJ could deliver up to 54 vessels in 2011-12, exceeding its target of 50 vessels p.a.
Higher-than-expected investment income. YZJ booked Rmb203m of interest income
in 3Q10, mainly relating to structured financial assets and cash deposits. YZJ had
Rmb7.9bn of financial assets comprising collateral for bridging loans extended to listed
blue-chip companies in China, listed shares, land titles and investment projects
supported by the Chinese government.
Management hopes to raise investments in financial assets to Rmb10bn in the mid-term
with an average return of 10%. We believe 4Q10 earnings could be lifted by higher interest
income as more financial assets are expected to mature.
YZJ booked Rmb347m of interest income in 4Q09.
Slight glitch in Jiangsu Changbo shipyard. No profits were consolidated in 3Q10
from YZJ’s new subsidiary, Jiangsu Changbo Shipyard. There were also two
cancellations during the quarter for which the yard would be compensated. Changbo’s
order book was US$338m, comprising 20 bulk carriers for delivery up until 2012
Management expects Changbo to turn around in FY12 when YZJ has finished with
integrating and transferring management skills to beef up its operations. We do not
expect material earnings from Changbo in the meantime.
Valuation and recommendation
Maintain Outperform and target price of S$2.15, still based on 12x CY12 P/E. We
believe YZJ offers good value relative to its Chinese peers. It remains our preferred
Chinese shipbuilder for its quality execution and strong financial muscles. We continue
to see catalysts from stronger-than-expected orders and margins.
Another stellar quarterly performance, yet price drops 2.6% at time of writing. Opportunity for accumulation or wait and see? Tough call.
