Yangzijiang Shipbuilding (Holdings)

(15-07-2014, 09:17 PM)CityFarmer Wrote:

(15-07-2014, 06:11 PM)Tiggerbee Wrote: YZJ will dispose of its property development and metal trading biz at par value (210M RMB) and invest 0.5M RMB in a shipyard storage handling services company.

http://infopub.sgx.com/FileOpen/Announce...eID=305358

(Vested)

The shift of the company strategy is getting clearer. Property segment is out, the only property investment left is the redevelopment of the old yard.

More disclosure will come, i presume

(vested)

Actually I have a rather different take.

When I was vested (still interested) in YZJ, I am actually assuming the following:

1) Was a conglomerate in the making
2) Exiting HTM in a brilliant way by way of IPO and milking further gains.
3) Build property arm slowly, when a later spin off.

With YZJ focusing with its core, there is less risk, and that is where the competency is.

2) could still happen, but 1) and 3) seem unlikely with its U-turn of the 5 segment strategy.

As for core shipping, with the exception of 10K Teu, which still command rather decent margin, the recent wins/ or potential win of Iran orders of Karmaxs, with price of 31mio - 32 mio is hardly fat margin, and is only 1-2 mio higher than the recent wins, and the orders is for 2016. Why the rush? Aren't they cherry picking orders, why still the bulkers dominant orders? What happen to the LNG/LPG carriers ambitions? What about the 14k containers?

YZJ is in a period of super low steel price... 2016 is rather far away, no one know if steel price will go lower or go higher... Cost is an unknown variable. HTM can't bail them out this time...

(not vested, on radar)

It is no surprise the company able to deliver the rest of 10,000TEU containerships on time, after the success on the very first one...

(vested)
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Yangzijiang continues to deliver its 10,000TEU containership
 The containership is the sixth 10,000TEU containership delivered to Seaspan Corporation
向西斯班集團成功交付第六艘10,000TEU貨櫃輪
 Seaspan Corporation will charter out this containership to Japan’s leading shipping line, Mitsui OSK Lines Limited
西斯班集團將把本艘貨櫃輪租賃給日本知名航運公司--商船三井株式会社

http://infopub.sgx.com/FileOpen/Press%20...eID=306098

YZJ announce latest results:

http://infopub.sgx.com/FileOpen/YZJ_2Q20...eID=308530

My thoughts:

The positives:
1) "the darkest hour" before dawn, did not seem to arrived? Take away one off tax rebate, and assign an 15% tax rate, plus the one off maturity of fixed deposit of 130 mio, NP still improve from 808 mio rmb to 856 mio.

2) The fall in revenue from HTM is offset by increase in shipbuilding activities

3) Shipbuilding margin improved QoQ

The negatives:
Total HTM assets did not fall from Q1, in fact it increase marginally from 12.7 billion to 12.9 billion. Yet revenue from HTM has dropped from 597 mio to 339 mio.

It could mean 2 things: Most maturity date did not fall in Q2. BUt if you look at past year trends, the weakest quarter is usually Q3 or Q4, and it is the first time, a significant fall of revenue is recorded.

So it could also mean there is some rolling over (speculation)of HTM assets. e.g. extension of maturity date.

But all in all, positives offset negatives.

(divested, but still interested)

Assuming that the company will run off its financial assets, the next question is what the company will do with the capital returned and future profit since they also reduce their investment in property business? higher payout to shareholders or any other investments or acquire more shipyard?

Just checked their presentation, apparently, they are not in runoff mode at all.

"In 2Q14, RMB$1.7 billion was redeemed, with new capital invested of RMB$1.9 billion"

(06-08-2014, 02:40 PM)freedom Wrote: Assuming that the company will run off its financial assets, the next question is what the company will do with the capital returned and future profit since they also reduce their investment in property business? higher payout to shareholders or any other investments or acquire more shipyard?

Just checked their presentation, apparently, they are not in runoff mode at all.

"In 2Q14, RMB$1.7 billion was redeemed, with new capital invested of RMB$1.9 billion"

I am expecting the HTM asset was reduced to close to RMB 10 billion, but it seems not the case. May need time to dig in to explore the real picture.

(vested)

Shipbuilding Focus To Defend Its White List Place


YANGZIJIANG SHIPBUILDING is redirecting resources from its non-shipbuilding businesses to defend its position in the shipbuilding industry.


At a media briefing yesterday (Wednesday), Yangzijiang executive chairman Ren Yuanlin said that the Group will focus on its core strengths as a shipbuilder to ensure that it remains on the white list of enterprises receiving government support for the industry.

On 15 July, it announced that it had divested its entire 50% stake in Wujiang Jingke Real Estate Development Co Ltd for Rmb 200 million.

The Group intends to gradually reduce its investments in non-core businesses.

Yangzijiang's change in corporate direction was triggered by a recent development in China's policy to revive its shipbuilding industry, which is struggling with overcapacity.

Last year, China’s Ministry of Industry and Information Technology said that shipbuilding enterprises that comply with the standards set out by the government will be put on a white list for favorable policy support, such as bank credit and export rebates.

Those that fail to make the white list will face difficulty in obtaining bank financing.

"The white list standards are highly exacting, mirroring practices found in South Korean and Japanese shipyards," said Mr Ren.

Mr Ren expects the PRC shipbuilding industry to be left with only about 300 yards after the consolidation, from about 1,600 last year.

“Making it into the white list is even more difficult than receiving accreditation as a High/New Technology Enterprise,” he said.

The white list of top shipyards will be announced at the end of the year.

Government accreditation makes a big difference in the PRC shipbuilding industry.

Yangzijiang’s wholly-owned subsidiary, Jiangsu New Yangzi Shipbuilding Co Ltd, qualifies for a preferential tax rate of 15% as a High/New Technology Enterprise, compared to a standard rate of 25%.

On Wednesday, the Group posted a surge of 54% year-on-year in 2QFY2014 profit after tax to reach Rmb 1.2 billion, even though revenue had slipped by 3% to Rmb 4.3 billion.

The surge in net profit was largely due to tax refund arising from its High/New Technology Enterprise accreditation.

In FY2013, Jiangsu New Yangzi Shipbuilding had paid the standard 25% tax rate.

After renewal of the accreditation, it received a one-off tax refund amounting to a whopping Rmb 349 million, which amounted to some 28% of net profit.

As China's largest private shipbuilder with a strong financial position, Yangzijiang stands a high chance of making the white list.

Year-to-date, the Group has won the most new orders among PRC yards.

As at 30 June 2014, its outstanding order book amounted to US$5 billion for 122 vessels. It also held cash reserves of Rmb 2.6 billion.

It is also hard at work in improving its technological capability.

In 2011, Yangzijiang scored a first by being the first PRC yard to secure an order for the 10k TEU containership, breaking into a former stronghold of Korean shipyards.

It recently completed the design prototype and testing for 3 new products - the 84k cubic meter LPG vessel, as well as for 14k and 16k TEU containerships.

YZJ - Focus on core business

(06-08-2014, 09:05 AM)Greenrookie Wrote: The negatives:
Total HTM assets did not fall from Q1, in fact it increase marginally from 12.7 billion to 12.9 billion. Yet revenue from HTM has dropped from 597 mio to 339 mio.

It could mean 2 things: Most maturity date did not fall in Q2. BUt if you look at past year trends, the weakest quarter is usually Q3 or Q4, and it is the first time, a significant fall of revenue is recorded.

So it could also mean there is some rolling over (speculation)of HTM assets. e.g. extension of maturity date.

But all in all, positives offset negatives.

(divested, but still interested)

Some of the HTM asset has very likely been rolled-over, with a slight increase of RMB 0.2 bil in 2Q2014. Referring to the 2Q slides, the current portion of HTM asset was higher yoy and qoq, and coupled with lower profit from HTM, thus it is likely that higher yield ones have been rolled-over with lower yield ones, but shorter tenure. The company seems no hurry to retreat the HTM asset, at least not as hurry as I anticipated.

The property segment still sizable. The last disposal was only one subsidiary of Jiangsu Hengyuan, rather the entire investment.

The main five segments still around, but with a little twist in the company presentation and strategy

(vested)

China authority has determined to restructure the shipbuilding sector, and with upcoming plans for the sector too.

I wish YZJ will able to participate in the masterplan, and a dominant participant...

(vested)

China to build more LNG tankers in high-tech push

Chinese shipyards are aiming to take some $10 billion in orders for new LNG tankers over the rest of the decade, part of a plan to restructure the country's ailing shipbuilding sector and secure China's energy supply chain.

The push to build its own natural gas delivery vessels will boost China's capability in high-tech ships and pose a challenge to South Korean and Japanese shipyards that have been the main suppliers of large gas tankers for 30 years.

Up to 50 liquefied natural gas (LNG) tankers, or more than 20 percent of the 225 LNG vessels expected to be added worldwide by the end of 2020, are set to be built in China to deliver gas to its ports, according to estimates from ship safety agency the American Bureau of Shipping (ABS).

Relying on home-built vessels for gas deliveries - which China needs to serve new import terminals coming online - gives it greater control over its supply chain and snags a bigger share of the high-value end of the shipbuilding business.
http://www.cnbc.com/id/101893581#.

Kim Eng analyst report, rating BUY, TP $1.38

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Brighter order prospects than peers
§ 2Q14 PATMI beat expectations on better revenue and margins.
§ Raise EPS on higher margin and order-win forecasts.
§ Upgrade to BUY from HOLD, with higher SOTP-based TP of SGD1.38.

http://remisiers.org/cms_images/research...KE_yzj.pdf

DISPOSAL OF 50% EQUITY INTEREST IN THE REGISTERED CAPITAL OF JIANGSU HUAYUAN
METAL PROCESSING CO., LTD.

The Board of Directors (the “Board”) of Yangzijiang Shipbuilding (Holdings) Ltd. (“YZJ” or the “Company”) wishes to announce that the Company has recently disposed 50% equity interest in the registered capital of Jiangsu Huayuan Metal Processing Co., Ltd. (“JHMPCO”) (the “Disposal”), a company registered in the People’s Republic of China, with a registered authorised share capital of RMB300,000,000, which is engaged in ship demolishing business through its wholly-owned subsidiary, Jingjiang City Dunfeng Ship Dismantle Co., Ltd.
http://infopub.sgx.com/FileOpen/Announce...eID=309610