Yangzijiang: HSBC upgrades to Overweight from Neutral, raises TP to $2.10 from $1.90. Notes YZJ’s firm orders from Seaspan have finally been sighted after months of delay, with US$700m worth of orders for 7 container ships bagged and options for 18 more worth US$1.8b to be subsequently finalized...
Says the orders are important for YZJ as it is a maiden foray in 10,000+ TEU segment, which holds growth potential and is currently dominated by Korean yards. Adds, most of YZJ’s customers have >10% vessels in the 10,000+ TEU category, highlighting potential to improve fleet efficiency for these firms...
Says the orders provide visibility past 2012, although estimates Seaspan orders at ~ 10% gross margins as opposed to ~20% currently. Notes financial income will be boosted as they have received advances of 20% of order value (RMB 3.3b).
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