Yangzijiang

Yangzijiang: CS hosted a non deal roadshop for Yangzijiang, where mgt shared its strategy to overcome the shipbuilding downturn. Co. intends to grow its supplementary business. While Yangzijiang has secured its first jackup rig order, mgt noted strong competition from other Chinese yards and its shipbreaking facility is likely to see capacity ramp up in 2013, and aims to achieve Rmb1 b of rev at full utilisation. Overall, the co is targeting US$1.6-2.5 b of new orders in 2013, consisting mainly of further contracts with Seaspan for 10,000 TEU containerships. Given the expected decline in shipbuilding margins, the co intends to grow its supplementary rev streams. Total held to maturity assets is expected to be maintained above Rmb10 bn, providing a yield of 10-12%. In addition, Yangzijiang will be working with Jiangsu Huaxicun to develop land at its old yard into a residential and commercial property. CS maintain NEUTRAL rating and target price of $1.10, based on valuing the shipbuilding business on 2013 P/E of 9x.