Yangzijiang

Yangzijiang: Deutsche reiterated their Buy rating on Yangzijiang (TP: $1.90).

House reckons consolidation within the shipyard industry in China should accelerate under the current deteriorating conditions, underpinned by weak new orders (-56% year-to-date) and lower newbuilding prices (-2%).

Yangzijiang is expected to be one of the winners as the industry evolves to look more like the landscape in South Korea where only a few major yards dominate.

Following the surge in China-listed shipyard stocks which resulted in valuations of ~5x P/B, Yangzijiang's stock price appears to lag with valuations at 1.2x P/B, and may be positively re-rated as the market searches for related laggard names.

Yangzijiang's US$4.6b orderbook for 114 vessels should keep its yards busy for the next 24 months.