Yang Zi Jiang: Macquarie initiates with O/p, call TP $1.34. Note that Co. best positioned to stay ahead. Top pick in Chinese shipbuilding coverage, believe it should continue to deliver the highest ROE with its highly profitable yard operations and enhanced returns by investing its high cash balance.
Co. also has a strong financial position to withstand the current slowdown in new orders and places strong emphasis on profitability, with potential to compete for higher-value orders.
Robust financials is a key differentiator for YZJ. Planned capacity expansion will be timely in 2014. Overall, currently trades at 1.10x FY12E P/B, key catalysts from 1) entry into the O&M segment and 2) new order wins, especially for its flagship 10,000TEU SAVER designs.
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