Yangzijiang

QD Pacific, subsidiary of the Qatar sovereign wealth fund, will move ahead with the planned subscription of 83.6m new YZJ shares at $1.295/sh, without needing YZJ to complete an earlier purchase agreement related to the PPL acquisition, but provided other conditions are met by 27 Oct 2010. While QD’s 2.2% stake in the enlarged share capital is small, it is still signals a vote of confidence in the China-based shipyard,and allows YZJ to potentially tap into the Qatari Diar’s network and make inroads into the Middle East. Net proceeds earmarked for potential M&A, but could be invested in financial instruments in the meantime. DMG keeps Buy, but trims target from $1.80 to $1.75 to reflect expected stronger CNY vs USD following China’s call for increased flexibility in its currency.