CLSA maintains ‘Outpeform’ call on Yangzijiang, raises TP to S$2.05

92,500 dwt post-panamax built by Yangzijiang

CLSA HAS maintained its ‘Outperform’ call on Yangzijiang, and raised its target price to S$2.05 which translates to upside of 16% based on last close price of S$1.77.

Based on year-to-date order flow and a recovery re-rating in the marine sector, the analyst upgraded her estimates of order wins by the leading Chinese shipyard by up to 90%.

Yangzijiang has received downpayments for about nine vessels or 60% of the non-effective orders (i.e. firm contracts not backed by initial deposits) placed in August, bringing effective order wins in 3Q10 to S$421 million, double the 1H quarterly average.

The analyst, Chua Ai Jen, expects effective order momentum to continue in 4Q with ten orders worth US$494 million.

”Although the bulk segment remains relatively over-supplied, Yangzijiang’s focus on the smaller handy and panamax sub segment stands it in better stead vs peers as these are more flexible than larger vessels, more highly geared to the booming Chinese coastal trade, and less affected by the fallout in rates and demand expected to hit capesize bulkers as Vale’s giant Chinamaxes come online in 2011.

”Its expertise in containers has also enabled it to benefit from increasing container orderflows, although the demand bias towards larger containerships means Korean yards have had more to gain.

“Yangzijiang’s Rmb 12 million R&D JV with Shanghai Bestway Marine Engineering Design and Jiangsu Zhongzhou Marine Equipment to provide design services for shipbuilding and offshore projects will further enhance the services that it offers clients, enabling it to win more shipbuilding contracts.”

Related story: Credit Suisse says Yangzijiang has 'undervalued growth and improved capabilities' 


China Taisan TDR issue price at 16% premium

China Taisan wants to ramp up its capacity from 24,000 tons currently to 36,000 tons a year.

CHINA TAISAN has fixed its TDR issue price at NT$12.15 (51 cents) at the close of its book building on 28 Sep, and listing is to be on 6 Oct.

This translates to a 16% premium for each TDR representing 2 Ordinary shares, as the shares closed at 22 cents each this morning.

S$31.9 million will be raised in the TDR issue, which will be backed by 125 million new shares and 125 million vendor shares.

The synthetic performance polyester maker intends to use the issue proceeds for a new plant in Jinjiang, near its existing facilities. 

The TDR Issue Price was about 10% higher than its weighted average price during the book building from 23 Sep to 28 Sep.

Related story:  CHINA TEXTILE Companies Made Whopping S$63-118 Million In 1Q



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