Yangzijiang

YJZ share price has corrected by 17% since its peak of $1.50 in April. Stock has been trading in a tight sideways range of $1.20 to $1.28 past two weeks, closing at $1.24 yesterday. In summary, investors had penalized YJZ for its exposure to Europe, which generates 78% of orderbook sales.

What is less known among retail investors is that YZJ’s European orderbook exposure is mitigated by the fact that 43% of total orderbook actually goes to German shipowners - an economy with strong fundamentals unlike Greece, Hungary, Portugal and Spain. Unlike Cosco Singapore, YJZ’s shipyards have not announced any vessel cancellations owing to its disciplined receivables management policy.

20% of cash deposits are required at point of newbuild order placement and an additional 20% banker’s guarantee must be also placed. YZJ also allows its customers some flexibility of swapping orders between bulk carriers and container vessels in case market conditions change. YZJ also hedges its revenue receipts in Euro so the extent of fallout in the cross rates is less than feared. Watch this stock. A move towards $1.28 could signal an impending breakout.