YZJ

YZJ: Co will dispose of its 31.5% stake in Wuxi Runyuan Tech for approx Rmb104.0m which is approx a 10% premium to NAV which it acquired in Sep 2011. Co has another micro-financing unit Jiangsu Runyuan which co acquired 100% at Rmb300m. UOB maintains Buy on yday’s news of order cancellation. Co will suffer no loss from the cancellation as co has impounded the 20% downpayment which is approx US$5m. Even if co is able to resell the vessels at a 10% discount to current newbuild prices, co will be able to break even. House expects more cancellations ahead but sees no danger for YZJ as 28% of its vessels are from European shipowners and financing is from the Chinese banks DBS also does not foresee much difficultly for YZJ but opines that cancellation will be negative on sentiment. Highlights that Cosco Corp has the highest exposure to Greece and Europe with over 60% of orderbook (28% from financially vulnerable Sevan Drilling).