Yang ZiJiang

Yang ZiJiang: 3Q12 results continues to be weak and came in at the lower end of estimates. Rev at Rmb3.6b, -1% yoy and -7.7% qoq and net profit at Rmb 877.2, -14% yoy and flat qoq. Gross margins fell to 29% vs 32% yoy. Rev contribution from Shipbuilding business -4% yoy to RMB3.3b largely due to lower vessel delivery resulted from vessel cessation back in 1H12. The Group ceased 8 shipbuilding contracts in 1H12. Decline in rev from Shipbuilding business was partially offset by the added contribution from the Group’s expanded portfolio which includes ship demolishing and other shipbuilding related businesses. Ship demolishing business contributed RMB145.6m to the Group’s revenue in 3Q12. Rev contribution from Investment segment jumped 51% yoy to RMB305.4m, largely due to increase in loans to third parties in the Micro Finance business and steady investment in held-to-maturity assets in 3Q12 as compared to 3Q11. Grp’s orderbook currently stands at Group’s outstanding order book stood at US$3.6b and add that it is determined to maintain shipbuilding as the Group’s core business. But considering the downtrend shipbuilding industry is and will be in for the near future, grp will take a proactive approach in diversifying business model into an integrated marine service provider.