Yangzijiang

Yangzijiang: (The Edge) Fights to avoid order cancellation while venturing further into micro-finance. House trying to help FreeSeas sort out its financing difficulties to avoid having the orders cancelled. Note that FreeSeas still wants the vessels and they can afford to buy one. YangZijiang has offered FreeSeas a leasing arrangement for the cessels that will cost them 15% more. YangZiJiang add that as these are standard Handymax Vessels, the house do not foresee any difficulty to dispose of the vessels upon completion, with the benefit of the 20% from deposit collected. Add that in an environment of tighter ship financing, grp would be the least affected among Chinese yards because of its broader customer base and net cash position. Grp also setting up its own micro-financing arm, and will inject Rmb 300m into it, and enable the business to apply for a banking license when the banking industry opens up. Analysts note however that these investments are small vs grp’s mkt cap and it needs to get a lot bigger before investors are forced to come up with a stronger view. We note that markets have diverse views on counter, with 12 Buy calls, 4 Holds and 6 Sells, with a mean TP of $1.43.