Yangzijiang Shipbuilding

Yangzijiang Shipbuilding: OCBC maintains Hold and reduces TP slightly to $1.08 fron $1.03. According to newswires and shipbrokers, Yangzijiang Shipbuilding has secured an order for the construction of 4, 82,000DWT bulk carriers from Everbright Metal. At a price tag of US$26m/unit, these vessel orders are close to newbuild prices in Aug published by RS Platou. Estimate that YZJ has secured new orders worth about US$400m YTD, underscoring a slow year in terms of order flow. In view, the greatly reduced new order flow for traditional vessels that Chinese yards have been reliant on will only accelerate the transformation of the Chinese shipbuilding industry, and yards that have the balance sheet and resources are likely to emerge stronger if they persevere in the yard transformation process. In the medium term, however, outlook for Chinese yards remains dim. House lowers FY13 gross profit margin assumptions for YZJ’s shipyard operations from 25.8% to 24.2% as vessel values have been trending lower.