Yangzijiang

Yangzijiang: Maybank-KE reiterating its Buy call for the counter with a TP of $1.38. Recent policies on China’s shipping and shipbuilding sector suggest a firmer push for shipyard consolidation. The number of Chinese shipyards has dwindled from more than 3,000 in 2010 to about 700, but needs to be cut further. A capacity flush is essential for sustaining ship-price increases to aid a sector recovery. YZJ was one of 51 Chinese shipyards in a recent government white list to receive policy support, and investors are expecting a funnelling of orders to “white-list” yards to hasten the demise of unlisted yards. For the first time, the State Council has issued suggestions for developing the shipping industry. YZJ can capitalise on this, given its strong technological capability, strong financials; and execution record. These should appeal to ship owners and YZJ could emerge with a bigger market share. YZJ leads in China’s market with the highest new orders YTD and one of the largest order book.