Yangzijiang

Yangzijiang: BOA-ML restarts at Buy with $2.26 target, based on 14X FY11 P/E. Says China-based shipbuilder deserves re-rating given its sustained above-average profit margins, 3-year orderbook visibility, potential to close in on TDR price, which trades at premium to mother shares; believes the market has underestimated the sustainability of YZJ’s profit margins in FY10-12, despite its improving productivity, and the revenue recognition of existing orders that are largely secured at higher prices in 2007-08. Says company could have RMB9.6bn (S$1.9 bn) in funds for acquisitions in FY11, with potential targets being established yards equipped for new business like offshore marine engineering, or new yards located near to YZJ’s existing facilities.