Yangzijiang Shipbuilding (Holdings)

[CityFarmer]

The diversification will smooth out the revenue for the company...

(vested)

Yangzijiang Diversifies Shipbuilding to LNG Vessels with Orders Worth US$135 Million

Group has secured new orders to build two LNG carriers for JHW
Engineering & Contracting Limited
 集團取得新訂單，為 JHW Engineering & Contracting Limited 建造兩艘液
化天然氣運輸船
 Promising outlook for the demand in liquefied gas will support the
Group’s long-term growth strategy
 液化氣需求的良好前景為集團長期成長提供支持
...
http://infopub.sgx.com/FileOpen/YZJ%20Pr...eID=335317

[CityFarmer]

The company announced the FY2014 result. Presentation link below
http://infopub.sgx.com/FileOpen/YZJ_FY20...eID=336461

In brief
- The jack-up rig project was a drag to overall margin. Gross margin drop from 33% to 27% yoy. Luckily only accepted one contract. The drag will continue till FY2015 delivery.
- The NP margin was saved by tax rebate, and still increased from 21.6% to 22.7%. The preferential tax rate of 15% still applicable in FY2015.
- Overall the shipbuilding segment is recovering, and will do good in FY2015, with the strong order book.

- Investment revenue (HTM and micro-finance) continue to contribute to bottom line. The HTM asset has been reduced from 14.1 billion to 10.8 billion, and the pull-back will continue, base on announcement.
- At the same time, debt was reduced significantly, from 13.4 billion to 8.0 billion, and brought the gross gearing down from 73% to 38%. Net gearing (after all cash) was 9.8%, which is very low for a shipbuilder indeed.
- There was a trend to shift the HTM investment to gov-related, from a typical 15% to close to 50% as of 4Q2014. Gov-related is the lower risk among others.

- Dividend increased from 5 cent per share to 5.5 cent per share.

I will continue to hold the stake, and happily collect the increasing dividends, which is around 4.5% yield in FY2014, base on current price level.

(vested)

[desmondxyz]

Yangzijiang Nominates New CEO and Strengthens Its Core Management Team

http://infopub.sgx.com/FileOpen/Press%20...eID=338015

CLARIFICATION ON THE UPSTREAM ARTICLE “RONGSHENG SET TO BRING IN PARTNER”

http://infopub.sgx.com/FileOpen/Announce...eID=338019

[CityFarmer]

Yangzijiang Nominates New CEO and Strengthens Its Core Management Team

http://infopub.sgx.com/FileOpen/Press%20...eID=338015

CLARIFICATION ON THE UPSTREAM ARTICLE “RONGSHENG SET TO BRING IN PARTNER”

http://infopub.sgx.com/FileOpen/Announce...eID=338019

Finally the succession plan executed. The son has taken over the CEO role.

One relevant article on the Rongsheng clarification. It is very unlikely YZJ will involve in Rongsheng rescue plan...

Yangzijiang unlikely to invest in struggling shipbuilder Rongsheng: CIMB
SINGAPORE (March 9): Yangzijiang Shipbuilding is unlikely to take a stake in cash-strapped shipbuilder Jiangsu Rongsheng Heavy Industries even if it was asked by Chinese authorities to do so, according to CIMB ( Financial Dashboard).

Oil and gas newspaper Upstream reported that Yangzijiang is in advanced talks to buy a stake of up to 20% in Jiangsu Rongsheng, which is undergoing restructuring and has been loss-making since 2012.

Other potential bidders include China Mingsheng Bank, China Everbright Bank and China Development Bank, Upstream reported.

"The local authorities may have asked Yangzijiang to help the struggling neighbouring yard," CIMB analyst Lim Siew Khee wrote in a note today.

"We think Yangzijiang may give Rongsheng a pass as management has said it plans to exit the unprofitable offshore market," she said, noting that Yangzijiang is only starting to break even on its maiden jack-up rig project.

"We think Yangzijiang is unlikely to take on an additional burden as it is also trying to keep its yard utilised."

Yangzijiang's order book of US$4.6 billion ($6.3 billion) will largely be depleted by 2016, according to Lim, who has a "hold" call and $1.30 price target on the stock.

Yangzijiang shares were down 1.2% at $1.215 at 5:00pm (0900 GMT).
http://www.theedgemarkets.com/sg/article...sheng-cimb

[CityFarmer]

DBS Vickers view on the recent news on YZJ/Ronsheng partnership.

Any investment by Yangzijiang in Rongsheng not all bad, says DBS Vickers

SINGAPORE (March 10): Any investment by Yangzijiang in Jiangsu Rongsheng Heavy Industries may not be unthinkable despite the latter's losses and current challenges in China's shipbuilding industry, says DBS Vickers.

"In the longer term, if the offer price is attractive and the restructuring plan is clearly mapped out, it may not be a bad idea to consolidate and eliminate the potential threat considering Rongsheng’s strategic location within Yangzijiang’s close proximity," DBS Vickers analyst Ho Pei Hwa wrote in a note today.

"In addition, Rongsheng has one of the largest and most advanced shipyards in China, which would allow Yangzijiang to expand its capacity in the construction of sophisticated vessels."

Still, the likelihood of any deal is "low", she said, citing Rongsheng's "complicated operational issues and restructuring exercise as well as potentially slow shipbuilding orders this year".
...
http://www.theedgemarkets.com/sg/article...bs-vickers

[CityFarmer]

Since YZJ isn't halted, the Rongsheng disposal has nothing to do YZJ...

China Rongsheng halts trading, cites possible deal announcement
11 Mar 2015 10:08
[SHANGHAI] China Rongsheng Heavy Industries Group Holdings halted trading in its shares on Wednesday, citing a pending announcement on a "possible very substantial disposal".

On Tuesday, private Chinese shipbuilder Yangzijiang Shipbuilding Holdings said government agencies had approached it to buy a stake in Rongsheng and that it had yet to make a decision.
...
REUTERS
Source: Business Times Breaking News

[CityFarmer]

Rongsheng has signaled its plan to sell assets, rather than capital injection, to save the company. It may be interesting for YZJ to buy the valuable asset at cheap, rather than invest direct into the company restructuring...

Let's see who is the buyer...

China Rongsheng Signs Initial Pact to Sell Shipbuilding Operations
Shipbuilder China Rongsheng Heavy Industries Group Holdings Ltd. has taken a step toward selling its core shipbuilding and offshore engineering businesses to a Chinese investor.

Rongsheng said on Monday that it entered into an initial agreement with a potential investor over a possible sale. It didn’t disclose the potential buyer’s identity.

The agreement, which will remain valid until the end of June, will be subject to further negotiation and due diligence, the company said.
...
http://www.wsj.com/articles/china-rongsh...1426513512

[CityFarmer]

The company management is looking to deploy its cash reserve, in a professional way...

(vested)

---------
SUBSCRIPTION OF SHARES IN:-
- ZHUHAI LEADING POWER ASSET MANAGEMENT CENTER (“LIMITED PARTNERSHIP”)
- ZHUHAI INTERCONNECT LEADING HIGH-TECH INDUSTRIAL INVESTMENT CENTER
(“LIMITED PARTNERSHIP”)
The Board of Directors (the “Board”) of Yangzijiang Shipbuilding (Holdings) Ltd. (“YZJ” or “the
Company”) wishes to announce that its wholly-owned subsidiary, Jiangsu New Yangzi Shipbuilding Co.
Ltd (“JNYSCO”) has subscribed for 30% equity interests respectively in the capital of Zhuhai Leading
Power Asset Management Center (“Limited Partnership”) (“ZLPAM”) and Zhuhai Interconnect Leading
High-Tech Industrial Investment Center (“Limited Partnership”) (“ZILHT”) (the “Subscriptions”), both
registered in Zhuhai city, People’s Republic of China, at a consideration of up to RMB15 million and
RMB90 million respectively, thereby making ZLPAM and ZILHT as associates of the Company
...
http://infopub.sgx.com/FileOpen/YZJ%20-%...eID=339594

[CityFarmer]

Deutsche Bank view on the company.

Yangzijiang stands out from crowd but not spared industry woes: Deutsche Bank

SINGAPORE (April 6): Yangzijiang Shipbuilding is a key beneficiary of the ongoing consolidation in China's shipbuilding industry, but it will not be spared challenges arising from the current sector-wide slowdown, says Deutsche Bank.

China now has only 60 to 70 active shipyards, down from more than 2,000 a few years ago, according to Deutsche Bank analyst Kevin Chong, citing feedback from Yangzijiang's management.

These active yards are those that are still receiving new orders, continue to be supported by banks, and can deliver the projects on hand.

"Yangzijiang will be a key beneficiary of the Chinese shipbuilding industry consolidation in light of its healthy experience, product quality and customer recognition," Chong wrote in a note today.

"However, new vessel orders in China will likely slow down given weak ship-chartering rates and subdued customer sentiment, and offshore & marine orders should be negatively affected by low oil prices," he said.

Yangzijiang's order book as at Dec 31 was US$4.6 billion ($6.2 billion), comprising 96 bulk carriers worth US$3.2 billion and 20 container ships worth US$1.4 billion.

The company has indicated it will dispose of its investments in non-related assets, mainly its held-to-maturity financial investments, which it has reduced from RMB14 billion ($3.1 billion) in 2013 to RMB10.8 billion last year.

Deutsche Bank has a "buy" rating and $1.40 price target on Yangzijiang.

Yangzijiang shares ended 0.8% higher at $1.295 today.
http://www.theedgemarkets.com/sg/article...tsche-bank

[greengiraffe]

Just a few devils advocate here for Chinese yards in general:

i) RMB has been strong while labour costs in mainland is also rising that will add on to the costs of Chinese yards relative to the traditional powerhouse in Japan and Korea

ii) weak global shipping charter rates as a whole will slow capex for replacement vessels in general

iii) the current glut in global O&G, commodities will have flow on effect on the various segments of the global offshore sector. Eventually the slack in demand will result in excess capacity for global ship building and repair businesses - no viable businesses globally will sit back and wait for businesses to come to them, ie competition amongst yards globally can expect to stiffen and I do not think that many analysts have actually got much clue on how dire the situation can be.

iv) there is no doubt YZJ is a well managed Chinese yard. However, in view of the various headwinds, it pays to be cautious. Baring in mind that marine industry is a global business and not a domestically driven one even though Chinese demand for commodities globally may result in a baseline demand for vessels needed for transportation of these commodities.

No Vested Interests
GG

Deutsche Bank view on the company.

Yangzijiang stands out from crowd but not spared industry woes: Deutsche Bank

SINGAPORE (April 6): Yangzijiang Shipbuilding is a key beneficiary of the ongoing consolidation in China's shipbuilding industry, but it will not be spared challenges arising from the current sector-wide slowdown, says Deutsche Bank.

China now has only 60 to 70 active shipyards, down from more than 2,000 a few years ago, according to Deutsche Bank analyst Kevin Chong, citing feedback from Yangzijiang's management.

These active yards are those that are still receiving new orders, continue to be supported by banks, and can deliver the projects on hand.

"Yangzijiang will be a key beneficiary of the Chinese shipbuilding industry consolidation in light of its healthy experience, product quality and customer recognition," Chong wrote in a note today.

"However, new vessel orders in China will likely slow down given weak ship-chartering rates and subdued customer sentiment, and offshore & marine orders should be negatively affected by low oil prices," he said.

Yangzijiang's order book as at Dec 31 was US$4.6 billion ($6.2 billion), comprising 96 bulk carriers worth US$3.2 billion and 20 container ships worth US$1.4 billion.

The company has indicated it will dispose of its investments in non-related assets, mainly its held-to-maturity financial investments, which it has reduced from RMB14 billion ($3.1 billion) in 2013 to RMB10.8 billion last year.

Deutsche Bank has a "buy" rating and $1.40 price target on Yangzijiang.

Yangzijiang shares ended 0.8% higher at $1.295 today.
http://www.theedgemarkets.com/sg/article...tsche-bank