Yangzijiang

Yangzijiang: is down 2.6% at $0.945, with the bulk of trading activity and downward price move occuring after 4pm. Today's move is likely trading motivated, given lack of news flow. Nevertheless, we note that industry news flow continues to paint a picture of tough times for Chinese shipyards, given the extended lull period in terms of order flow. Already the industry is experiencing a consolidation phase, with a number of weaker players bowing out. Meanwhile, Yangzijiang has made inroads to venture upstream into rig building. Those that recall Cosco's experience may note concern that Yangzijiang's margins may take a hit as it climbs the steep learning curve.