Yangzijiang: 1Q16 net profit (Rmb445m, -37%) missed, due to shipbuilding sales (-13.1%), absence of one-off gains from forfeited downpayments and widening associates losses.
- Low net gearing of 4.3%, boosted by operating cashflow from working cap changes.
-8 shipbuilding contracts cancelled in the quarter. One has not begun construction, 4 have found buyers. 10-30% downpayments collected will be recognized. Cancellations reflect industry downturn
- Yangzijiang is currently trading at 7.6x consensus forward P/E and 0.8x P/B. The street has 8 Buy, 2 Hold and 5 Sell ratings on the Chinese shipbuilder with a mean TP of $1.11.
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