Yangzijiang Shipbuilding (Holdings)

Yangzijiang Shipbuilding (Holdings), Buy

Nov 8 close: S$1.32

Target price: S$1.41

OCBC Investment Research, Nov 8

Yangzijiang Shipbuilding (YZJ) delivered a 23 per cent year-on-year rise in revenue to 5.4 billion yuan and a 10 per cent fall in net profit to 866 million yuan in Q3 2018, bringing 9M18 net profit to 2.4 billion yuan. This is a much better than expected set of results, with 9M18 earnings accounting for 94 per cent and 90 per cent of ours and the street's full-year estimates, respectively.

Gross profit margin for shipbuilding was 20 per cent in Q3 2018, compared to 15 per cent in Q3 2017, mainly due to a stronger USD against the RMB, as well as reversal of 152 million yuan of provision that YZJ made previously (in anticipation of potential losses when the RMB was stronger). Though the group made an impairment of 333 million yuan on financial products, the investment segment delivered strong earnings of 373 million yuan in Q3 2018, which was a 67 per cent year-on-year rise.

With the better-than-expected results, we have also increased our earnings estimates and our fair-value estimate rises from S$1.32 to S$1.41. As such, we upgrade our rating to "buy".

Educator Index

Archive

2019
February
2018
November
December
November
December
November
October
September
August
July
June
May
April
March
February
January