UOBKayhian on 4 May 2015
FY15F PE (x): 8.3
FY16F PE (x): 8.4
1Q15 results were within our expectation. Yangzijiang Shipbuilding’s (YZJ) reported a
net profit of Rmb708m for 1Q15, which was 23% of our full-year forecast. Earnings were
boosted by: a) other income of Rmb127m (recognition of Rmb88m advances from shipowners
in contracts that were cancelled, in accordance to its accounting policy), other
gains totalling Rmb129m (Rmb55m gain from disposal of financial assets available-forsale)
and a 23% yoy decline in administrative expense to Rmb69m while interest
expense fell 54% yoy to Rmb50m on reduced borrowings.
Maintain BUY and raise target price from S$1.39 to S$1.67, based on 1.2x 2016F P/B
(previously 1.2x 2015F). YZJ has proven its leadership among non-SOE shipyards
throughout the years with its strong order win and project execution capabilities and a
robust balance sheet. The stock is expected to pay a decent annual dividend yield of
3.6- 3.8%.
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