Yangzijiang Shipbuilding (Holdings)

[Nick]

PROPOSED JOINT VENTURE WITH QATAR INVESTMENT CORPORATION

http://info.sgx.com/webcoranncatth.nsf/V...2003F38FB/$file/Announcement_20111212.pdf?openelement [SGX Release]

Seems they are going all out to ensure their absolute profits won't dip much post 2013. Expansion of its core ship-building capabilities, new type of product offerings (10,000 TEU vessel and off-shore vessels etc) and diversification into financial services and possibly real estate. Will it work ?

(Not Vested)

[Nick]

ACQUISITION OF ADDITIONAL 80% BENEFICIAL INTEREST IN JIANGSU HUAYUAN METAL PROCESSING CO., LTD (“HUAYUAN”)

YZJ increased its stake in a fully operational ship demolition yard from 20% to 100% for RMB 240 million. This will further diversify its earning and since it is counter cyclical to its core business of ship building, it can be a useful alternative source of revenue when the current orderbook dries up. The research report contains more details on this acquisition.

More information here -

http://info.sgx.com/webcoranncatth.nsf/V...D00271FAF/$file/Announcement_20111222.pdf?openelement [SGX Announcement]

http://www.remisiers.org/cms_images/rese..._BUY_-.pdf [Research Report]

(Not Vested)

[Nick]

If I am not mistaken, there hasn't been any contract win since the Seaspan contract was announced ? Will the push towards offshore (Qatar JV + PPL litigation), scrapping and investing in financial products be sufficient to overcome the drop in absolute profits in 2H 2013 onwards ? Granted, Seaspan might exercise the 18 options if they can find charters. Share price been rallying in line with the STI.

(Not Vested)

[Nick]

http://info.sgx.com/webcoranncatth.nsf/V...D002DAC87/$file/Announcement_20120326.pdf?openelement [Announcement]

Seems YZJ had adopted a new strategy on winning contract orders from more established clients...

[Nick]

Chairman's Statement:

http://www.nextinsight.net/index.php/sto...the-future [Article]

(Not Vested)

[Musicwhiz]

The Straits Times
Apr 30, 2012
TALKING TO... YANGZIJIANG SHIPBUILDING HOLDINGS
Charting the way forward come hell or high water

By Yunita Ong

THE executive chairman of Yangzijiang Shipbuilding Holdings said the five years it has been listed here has boosted its name in the market and brought rapid growth.

Between 2007 when it was first listed and last year, the China-based firm has lifted earnings 42 per cent, from 870 million yuan (S$173 million) to 3.977 billion yuan.

Net profit for the first quarter this year came in at 1.02 billion yuan, up 7 per cent over the same period last year.

Mr Ren Yuanlin, 59, told The Straits Times: 'Being listed on the Singapore main board has brought more credibility for Yangzijiang and made it easier to get orders.'

But Yangzijiang has also weathered its fair share of choppy waters and controversy in the five years of its listing.

Last year, the firm, which invested in two microfinancing firms, attracted investor concern after the shadow banking bubble burst in Wenzhou city.

But the firm released a statement reassuring investors that microfinancing represented less than 3 per cent of assets and was backed by sound collateral. Mr Ren also said that the microfinancing business would be 'secondary' and in support of the marine business.

'To make sure the business is very safe, we only aim to have a 10 per cent return. Generally in China, you can fetch a return as high as 25 per cent. We understand the potential risks and are cautious about this.'

In 2008, Yangzijiang was dropped from the Straits Times Index, which tracks the top 30 heavyweight stocks in Singapore.

'We would naturally like to be re-included on the STI. While we've been doing well in terms of liquidity, we are not ranked as highly in terms of market capitalisation, the main criteria used as consideration for reinclusion,' Mr Ren said.

Yangzijiang has bounced back from other shaky points in its history.

One example is the attempted acquisition in 2010 of investment holding company PPL Holdings, which holds a 15 per cent stake in rig builder PPL Shipyard. The purchase is in limbo as Yangzijiang's right to acquire the PPL Shipyard stake is being challenged by Sembcorp Marine in court.

In a new bid to enter the offshore marine industry, the firm established a joint venture with Qatar Investment Corporation in January.

'We hope that in three to five years, offshore marine will constitute 20 per cent of our business,' Mr Ren said.

Shipbuilding is also in a slump now - one reason why analysts are divided about Yangzijiang after the firm filed first-quarter results yesterday.

DMG Partners ranked it a sell at a target price of $1.04, citing the reason that 'shipbuilding outlook remains poor', although other analysts like AmFrasers Securities called it a buy at a target price of $1.68.

But Mr Ren has made plans to beat the slowdown. Yangzijiang is developing eco-friendly vessels that are more fuel efficient, have higher loading capacity and lower emissions, to help stimulate the replacement cycle for ships.

'The industry may be in a down cycle but we notice pockets of opportunity and capitalise on them,' he said.

'Many ships are reaching replacement age, fuel prices are increasing, and building cost is low during down cycles.'

It is also boosting its ship demolishing business and within three years, it is aiming to triple the production rate of its shipbreaking business to 600,000 units of light displacement tonnage a year.

The firm is turning to environmentally friendly shipbreaking methods to compete with low-cost ship demolishers in Bangladesh and India.

Mr Ren's belief that opportunities lie in challenges may have stemmed from the need to defy the odds in his youth.

Growing up in communist China, he was unable to attend university even though he had good grades because his father used to own a factory, thereby tarnishing the family as 'capitalist'.

His aspirations to be a carpenter were dashed when he was allocated by the state to work as a welder at Yangzijiang in 1973 - then known as Jiangyin Shipbuilding Factory.

'At first I tried to cultivate good relations with my superiors, so that I could be allocated to the carpentry division but it didn't work,' he said.

'Eventually I decided to change my own prospects through my own efforts.'

Because of his diligence at work, along with China's reforms, the firm allowed him to earn his diploma in economics from Jiangsu Television Broadcasting University, which he received in 1986. The qualification helped him to quickly move up the ranks.

'Now, I always think to myself: Why can't I succeed when others can? And that is why I always seek to grasp opportunities before they are gone,' Mr Ren, who described himself as 'very competitive', added.

'I think we're doing well now already, but we are still far away from being the best shipyard in China.

'And we still have a distance away from Korean and Japanese shipyards in terms of design, management and technology. To be able to close this gap and exceed the standards of Korea and Japan is our goal.'

[kazukirai]

Has anybody read Hugh Hendry's latest letter (Apr 2012)?
Has quite an 'interesting' view on YZJ in there.

The letter can be found here. See page 4 for the bit on YZJ.

[yeokiwi]

Has anybody read Hugh Hendry's latest letter (Apr 2012)?
Has quite an 'interesting' view on YZJ in there.

The letter can be found here. See page 4 for the bit on YZJ.

So interesting. I did not know that a china "bank" is listed in SGX.

[sgd]

very interesting indeed

But I don't think there will be much fallout for now, they have a pending dividend and as long as things are rosy in china this will not affect them much

but ... the first sign that china economy crash I gonna short shell this bugger right away

[Salty]

Chinese Shipyards Face Bankruptcy on Falling Orders, Hexun Says
2012-05-03 23:27:55.251 GMT


By Bloomberg News
May 4 (Bloomberg) -- Almost 500 Chinese shipyards out of a
total of more than 1,600 may close because of falling orders and
decreasing loans, Hexun.com reported yesterday, citing industry
data.
* About 80% of shipyards in the eastern Chinese province of
Zhejiang either stopped production or ran at half of
production capacity, according to the report
* New orders fell about 40% in the first two months of the
year and by 52% in 2011, according to the report