YZJ

YZJ: Results above consensus. 3Q Rev at Rmb3.5b +11.6% yoy +9.4% qoq with net profit at Rmb1.0b +39.8% yoy +5.9% qoq. Gross margins were up qoq from 22.1% to 27.7%. Better results were driven by more vessels constructed and delivered in 3Q2011 with sizeable contributions (55% of rev) in the 92500DWT space.

Other income also increased at Rmb229m with income of Rmb40m contributed by microfinancing businesses Wuxi Runyuan and Jiangsu Runyuan.

Order book stood at 114 vessels with total value of US$5.3b (Rmb33.6b). Co remains confident of new orders due to its R&D capabilities and strategy to capture perceived demand in 10k TEU container vessel space. Cautions that outlook for bulk carrier segment remains weak.

3Q EPS at Rmb26.6c. At annualized 9M11 earnings, co trades at approx 4.7x P/E. Peer COSCO trades at fwd P/E of 14.3x.