Yangzijiang

Yangzijiang: Recent order momentum continues, as the group announced that it has secured new shipbuilding orders of four 208,000DWT bulk carriers with options for two identical vessels, thirteen options consisting of five 82,000DWT bulk carriers, three 64,000DWT bulk carriers, and five 10,000TEU containerships converted into effective orders in September 2013. The total contract value of the above-mentioned seventeen new effective orders is ~US$871m. The 17 new effective Contracts are scheduled for deliveries in years 2015 to 2016, and will not have any significant impact on the earnings of the Group for FY13. The latest order wins brings Yangzijiang’s year-to-date order wins to a total of fifty-two shipbuilding contracts amounting to US$2.1b, with US$1.1b contracts secured in 3Q13. This is in contrast to the US$300m worth of contracts secured in FY12. In light of the latest orders, the group’s effective orderbook is now raised to ~US$4b, alongside with 28 options outstanding worth US$1.36b entered into with its respective buyers, which will provide growth visibility over the next 3-4 years. Given its competitive edge, current valuations are undemanding at 7.3x forward P/E versus historical average of 8.3x. Overall, street consensus has 8 Buys, 8 Holds and 1 Sell Call rating on Yangzijiang with a mean TP of $1.12, although we would not be surprised to see a further upward re-rating going forward, on back of the group’s stellar order win momentum.