Yangzijiang Shipbuilding (Holdings)

[CityFarmer]

Source: Hellenics shipping news
YZJ pass 10000 TEU test. Seaspan accept ship


Seaspan Corporation announced that it accepted delivery of a 10000 TEU containership, the Hanjin Buddha, which was constructed using Seaspan's fuel-efficient SAVER design. The new containership, which was constructed by Jiangsu New Yangzi Shipbuilding Co., Ltd., is Seaspan's first SAVER design vessel in the company's operating fleet.

The Hanjin Buddha will commence a ten-year, fixed-rate time charter with Hanjin Shipping Co. Ltd. ("Hanjin"). The ship is the first of a total of three vessels to be chartered by Seaspan to Hanjin, and expands Seaspan's operating fleet to 72 vessels.

Gerry Wang, Chief Executive Officer, Co-Chairman and Co-Founder of Seaspan, commented "The delivery of the Hanjin Buddha is an important milestone for our Company, as it marks the first SAVER design containership in our fleet and the first Seaspan vessel to be chartered to Hanjin. We look forward to adding another four 10000 TEU SAVER design vessels to our operating fleet during 2014, two of which will be chartered to Hanjin. We continue to see strong interest from liner companies in our SAVER design and are committed to expanding our fleet and providing leading liner companies with state-of-the-art, fuel efficient containerships."
Source: Seaspan Corporation

This should be no surprise with the statement in FY2013 end-year report

"we are pleased to announce that our first 10,000TEU containership has successfully undergone its trial voyage in the month of February, and the ship-owner is satisfied with its performance and quality."

One technical milestone done. The next one is the jack-up rig, before the semi-submersible rigs. In fact, I am worry that it may be progresses too fast...

(vested)

Official announcement on the milestone.

(vested)
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Yangzijiang successfully scales up value chain, delivered first 10,000TEU containership in eco-ship design
 Successful delivery of first 10,000TEU containership in March 2014
 Seaspan Corporation declared conversion of four (4) more options for 10,000TEU containerships into effective orders
 Secured a total of 21 units of 10,000TEU containerships from Seaspan Corporation

Ref: http://infopub.sgx.com/FileOpen/YZJ%20Pr...eID=289463

[CityFarmer]

Update from the company on the latest order book. So far so good for its shipbuilding segment.

I had increased my stake at price below $1.05 recently. It became my 2nd largest holding in my portfolio now. Will it become the top one? May be if the price go down further...

(vested)

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The Board of Directors (the “Board”) of Yangzijiang Shipbuilding (Holdings) Ltd (the “Group” or the “Company”) is pleased to announce that following the 8 new effective orders announced on 27th February 2014 in the FY2013 full year results presentation, there are an additional 18 effective orders worth US$815 million secured by the Group in March 2014. The 18 new effective orders comprise of two (2) 82,000DWT, one (1) 208,000DWT bulk carriers and four (4) 10,000TEU containerships converted from existing options, and eleven (11) new orders for 82,000DWT bulk carriers.

The total of 18 new effective Contracts are scheduled for deliveries in year 2015 to 2017, and therefore will not have any significant impact on the earnings of the Group for the financial year ending 31 December 2014.

Ref: http://infopub.sgx.com/FileOpen/Announce...eID=289465

[Ken123456]

Update from the company on the latest order book. So far so good for its shipbuilding segment.

I had increased my stake at price below $1.05 recently. It became my 2nd largest holding in my portfolio now. Will it become the top one? May be if the price go down further...

(vested)

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The Board of Directors (the “Board”) of Yangzijiang Shipbuilding (Holdings) Ltd (the “Group” or the “Company”) is pleased to announce that following the 8 new effective orders announced on 27th February 2014 in the FY2013 full year results presentation, there are an additional 18 effective orders worth US$815 million secured by the Group in March 2014. The 18 new effective orders comprise of two (2) 82,000DWT, one (1) 208,000DWT bulk carriers and four (4) 10,000TEU containerships converted from existing options, and eleven (11) new orders for 82,000DWT bulk carriers.

The total of 18 new effective Contracts are scheduled for deliveries in year 2015 to 2017, and therefore will not have any significant impact on the earnings of the Group for the financial year ending 31 December 2014.

Ref: http://infopub.sgx.com/FileOpen/Announce...eID=289465

Seem like they r only left 4 more seaspan option according to feb report. They did not announce the amount of option left for this time so i assume evetything remain yhe same.

Yesterday announcement look like they are either not going to embed an option to purchase in their new project or buyer is not interest in it. I prefer the former.

Wonder how is the deal with Primepoint going. No announcement at all.

Wow Cityfarmer, 2nd largest holding? U not scare of their htm n risk of shadow banking in china?

[CityFarmer]

Seem like they r only left 4 more seaspan option according to feb report. They did not announce the amount of option left for this time so i assume evetything remain yhe same.

Yesterday announcement look like they are either not going to embed an option to purchase in their new project or buyer is not interest in it. I prefer the former.

Wonder how is the deal with Primepoint going. No announcement at all.

Wow Cityfarmer, 2nd largest holding? U not scare of their htm n risk of shadow banking in china?

Your question is likely be answered by post#291. It stated

"Seaspan Corporation declared conversion of four (4) more options for 10,000TEU containerships into effective orders".

Primepoint deal is pending for downpayment. May be it needs time to get fund of 200 mil, assuming 20% downpayment with the first order, excluding the options.

Is there a better time to practice the following quote from our guru, Mr. Warren Buffett? If I tell you it comes naturally for me. I am lying. I had worked hard to shot tons of questions to myself, and make sure I have reasonable answers for most of them. The hardest part is, it isn't a guaranteed success, even after the effort.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

P/S: I noticed double similar post from you, so I removed one of them.

[Greenrookie]

I am actually quite surprise by the run up of the price in the last 2 days. The order wins are in various shipping news and keep you keep track of them, the size of contract wins is hardly news, in fact, before YZJ declare the exercise of 4 options, clement already saw in the news.

I thought the weakening of price is due to the fear of default spreading and hitting some of YZJ HTM despite the order wins. So much for market efficiency theory.

Not complaining though, was tempted to accumulate more at 1.05 too, but when I ask questions about the HTM, I am not as confident as city farmer.

City farmer, perhaps can u share how u research and the questions u asked. Jiangsu where YZJ is based is one of the richest but also heavily geared province too, I read somewhere (can't remembers where) that there is a company at jiangsu ( coal or property company, can't remember) that can't pay interest.

[Ken123456]

I am actually quite surprise by the run up of the price in the last 2 days. The order wins are in various shipping news and keep you keep track of them, the size of contract wins is hardly news, in fact, before YZJ declare the exercise of 4 options, clement already saw in the news.

I thought the weakening of price is due to the fear of default spreading and hitting some of YZJ HTM despite the order wins. So much for market efficiency theory.

Not complaining though, was tempted to accumulate more at 1.05 too, but when I ask questions about the HTM, I am not as confident as city farmer.

City farmer, perhaps can u share how u research and the questions u asked. Jiangsu where YZJ is based is one of the richest but also heavily geared province too, I read somewhere (can't remembers where) that there is a company at jiangsu ( coal or property company, can't remember) that can't pay interest.

Why both u and cityfarmer like 1.05? Is it some magical number?

[CityFarmer]

I am actually quite surprise by the run up of the price in the last 2 days. The order wins are in various shipping news and keep you keep track of them, the size of contract wins is hardly news, in fact, before YZJ declare the exercise of 4 options, clement already saw in the news.

I thought the weakening of price is due to the fear of default spreading and hitting some of YZJ HTM despite the order wins. So much for market efficiency theory.

Not complaining though, was tempted to accumulate more at 1.05 too, but when I ask questions about the HTM, I am not as confident as city farmer.

City farmer, perhaps can u share how u research and the questions u asked. Jiangsu where YZJ is based is one of the richest but also heavily geared province too, I read somewhere (can't remembers where) that there is a company at jiangsu ( coal or property company, can't remember) that can't pay interest.

Why both u and cityfarmer like 1.05? Is it some magical number?

Yes, a magic number derived out from the recent low of the company

[CityFarmer]

DBS Group Research report on the company, TP $1.45

--------------------------------------
Secures contracts worth US$815m
- Strong YTD wins of US$1.07bn
- Decent newbuild pricing and margins

Reiterate BUY; S$1.45 TP offers potential total
returns of 40%
Yangzijiang announced that it has secured 18 new
contracts worth US$815m comprising:
i) thirteen 82k DWT bulk carriers
ii) one 208k DWT bulk carrier
iii) four 10k TEU containerships
YTD wins lifted to US$1.07bn; orderbook rises to
US$4.9bn. Including the above contracts, YZJ has secured a
total of 26 shipbuilding contracts with an aggregate value
of US$1.07 bn. We estimate that this would lift its
orderbook from US$4.6bn to US$4.9bn. Order wins have
been stronger than expected, forming 54% of
management's guidance of not more than US$2bn
shipbuilding contracts this year given that the yard is
already full till 2016. Revenue coverage ratio is currently
well supported at 2.5x and it may be too risky for this to
rise beyond 3x given the lower visibility on material cost and
forex.
Newbuild prices increased for Seaspan orders; decent
margins. We understand that the majority of the 82k dwt
bulk carrier orders would fill up additional slots that will
become available in 2015 and 2016, as a result of efficiency
improvement steps undertaken. Another positive note is
that Yangzijiang has managed to increase the price of 10k
TEU containerships to Seaspan by 3%, a midpoint of the
previous option price and current market price. Gross
margins for these new contracts are expected to be in the
range of 15-20%.
One of the best Chinese shipyards. We favour Yangzijiang
as the most competitive and profitable shipyard in China on
the back of its strong execution, industry foresight and
ability to move up the value chain more quickly than peers.
The group is well-positioned to clinch higher value-add
projects like mega containerships, mid-water semisubmersibles,
LPG & LNG carriers. Valuation is
undemanding at 1x P/BV in spite of its high ROE of 15%
and 4-5% dividend yield. Maintain BUY and SOTP-based TP
of S$1.45.

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

[CityFarmer]

City farmer, perhaps can u share how u research and the questions u asked. Jiangsu where YZJ is based is one of the richest but also heavily geared province too, I read somewhere (can't remembers where) that there is a company at jiangsu ( coal or property company, can't remember) that can't pay interest.

My views on the YZJ's investment and related questions/answers were already posted previously in this thread.

May be a more relevant one is , What if I am wrong?

My answer in my record was

Base on shipbuilding business outlook, and discounted the contribution from the investment on its margin, a conservative estimation of shipbuilding segment's earning was 2800 mil yuan in FY14. With a PE of 7 gives 19.6 billion yuan. With share base of 3832 million shares, it is about 5 yuan per share, or approx $1.05 per share.

If I am right on the valuation, I got the investment segment for free with $1.05 per share.

(vested)

[Ray168]

In addition, get 5% dividend while waiting for shipping industry to recover.

City farmer, perhaps can u share how u research and the questions u asked. Jiangsu where YZJ is based is one of the richest but also heavily geared province too, I read somewhere (can't remembers where) that there is a company at jiangsu ( coal or property company, can't remember) that can't pay interest.

My views on the YZJ's investment and related questions/answers were already posted previously in this thread.

May be a more relevant one is , What if I am wrong?

My answer in my record was

Base on shipbuilding business outlook, and discounted the contribution from the investment on its margin, a conservative estimation of shipbuilding segment's earning was 2800 mil yuan in FY14. With a PE of 7 gives 19.6 billion yuan. With share base of 3832 million shares, it is about 5 yuan per share, or approx $1.05 per share.

If I am right on the valuation, I got the investment segment for free with $1.05 per share.

(vested)