YZJ: Announce that the co has secured shipbuilding contracts of 7 vessels with value of US$206.2m YTD. Contracts secured comprise 4 units of 82k dwt bulk carriers, 2 units of 95k DWT bulk carriers and 1 unit of 47.5k dwt bulk carriers, and are scheduled for deliveries in the period from 2013 to 2015 and will not significantly impact earnings for FY2012.
Co secured US$1.2b in contracts as of 2011 and existing orderbook was approx US$5.3b as at 30 Sep 2011.YZJ trades at 6.8x fwd P/E.
ML maintains Buy with TP$2.08. House expects the shipbreaking business which co acquired remaining 80% and its JV with Qatar Invt Corp to penetrate the rig-building business from 2012 to be positive. Shipbreaking activities are expected to pick up after the collapse in BDI and that 17% of the global fleet is 20 yrs or older. House est 55% of YZJ US$3.5b orderbook is backed by high-margin order secured before 2009 which will be fully depleted by mid 2013E.
CIMB maintains Underperform but raises TP to $1.43 citing risks from its financial investments.
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