Yangzijiang: Nomura downgrades to Reduce from Neutral. Says it likes YZJ for its proactive approach in securing new contracts. But remains negative on the overall commercial shipping industry outlook and YZJ's shrinking margins and orderbook. Says share price has out-run itself and should correct to more accurately reflect the non-positive shipbuilding outlook.
Notes YZJ's recent order wins averaged US$28 m, vs Nomura's estimate similar orders would have fetched an average US$35 million previously, reflecting the poorer pricing environment. Doesn't expect newbuild demand to improve significantly this year, leaving bargaining power with buyers, pressuring prices.
Notes the US$206.2m new orders ytd is only 10% of YZJ's US$1.9 - 2.3 b goal and 20% of Nomura's US$990 m estimate.
But expects earnings to be supported by non-core investment income and other gains.
Cuts TP to $0.74 from $0.85 after lowering orderbook assumptions to reflect lower ASPs.
The stock is up 0.4% at $1.255
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