Yangzijiang

Yangzijiang: Secured US$360m contract from Seaspan for 4 additional 10,000 TEU container vessels. The 4, including the 7 ordered since Jun 11, will all be delivered from 2014. YZJ currently has a net cash and financial assets position of Rmb9.95b. With no details of the contract prices provided, DB believe they should come in below the June 2011 contracts with Seaspan for similar 10k TEU ships at US$100m each. Since mid-2011, ship prices have declined on average by about 11.3%. Overall, commercial vessel new order outlook appears weak in light of industry oversupply and weak credit conditions. In 2012, YZJ secured a total of only US$300m worth of commercial vessel orders. DB remain cautious on the overall Chinese shipbuilding industry. DB has a HOLD rating with a TP of $1.10 for YZJ.