Yangzijiang

Yangzijiang (YJZ): OCBC downgrades the stock to a Hold rating and lowered TP to $1.04 (from $1.26), following Chinese news reports that Yangzijiang Shipbuilding’s (YZJ) Chairman, Mr. Ren Yuanlin, has been accused of illegal activities by Tianjin Guoheng Railway Holding (Tianjin). This development means that a protracted battle may weigh on the sentiment of the stock. More importantly, this development only goes to show the difficulty in controlling companies that may land on YZJ’s plate in the future by virtue of its financing business. Based on the TP, house ascribed a 0.5x P/B on YZJ’s held-to-maturity assets.