YangZiJiang: AmFraser recommends now is the time to buy Yangzijiang on a dip. House believe that 1Q12 results will surprise on the upside against consensus, prompting upward estimate revisions and higher valuations. Estimates YZJ trades at 5.5X forward P/E, based on AmFraser's 2012F EPS estimate of S$0.219 and a 5% forward div yield, saying it's "very attractively priced for one of the top three shipbuilders in China, and certainly the most profitable.
Add that YZJ's profitability has been accelerating over the past 12 qtrs, delivering Rmb1.04b profit in 4Q; given that operations have not changed, similarly, expect just over Rmb1b this qtr, 18% ahead of consensus. Note slower-than-expected margin declines offer some upside potential to its above-consensus 2012 profit-after-tax-and-minority-interests forecast of Rmb4.2b. House has a Buy call with $1.60 TP.
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