Yangzijiang

Yangzijiang: may be in focus following a couple of broker TP upgrades.

BOA-ML reiterates Buy, ups TP to $2.12 from $2.08. Notes the Street has surprisingly not raised earnings forecast for FY12, post the co’s recent Rmb 4b FY11 net profit, which was spot on with its in-house estimate, but beat consensus by 7.8%. Expects strong upcoming 1H12 results to force the Street to play catch up with FY12E profit upgrades, latest by Aug 2012. Sees the following catalysts and new sources of earnings,
i) potential shipbreaking boom, as 27% of dry bulk carriers globally will be 20yrs or older in the next 5 yrs, amid low freight rates,
ii) likely maiden rigbuilding contract wins in 2H12, with YZK’s chances boosted by the Chinese govt’s support and Qatar Invmt Corp’s relationship with offshore players in the Middle East, and
iii) rising idle ratio, better freight rates and lower newbuild prices, which could attract the usually ill-disciplined owners to place mega-containership orders from mid-2012.

Separately, Credit Suisse reiterates Outperform, raises TP by 23% to $1.60. Says the stock is one of the cheapest in the shipbuilding business.