Yangzijiang: YZJ’s outlook at its 2014 earnings presentation highlights its superior R&D capability relative to peers. While the construction of jack up has resulted in a 4Q14 gross margin of 22.4% compared with 28.5% in Jan-Sept 2014, Barclays are encouraged by the new order win in LNG carrier which catapults YZJ to No.2-ranked among seven Chinese shipyards in terms of outstanding orders, and positive commentary for a US$2.0b new order win target for 2015, above US$1.8b in 2014.
With a 2015E net debt to equity of 5%, Barclays expects YZJ to be a long-term winner in the government-led consolidation in the shipbuilding market and maintain its Overweight rating with higher TP of $1.55 (from $1.50).
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