Yangzijiang Shipbuilding (YZJ) reported a 2% YoY rise in revenue to RMB3.7b and a 1% fall in net profit to RMB811.2m in 3Q14, in line with expectations. Excluding a one-off tax credit of RMB349m in 2Q14, 9M14 core net profit accounted for 77% of our full year estimate. The group delivered eight vessels in 3Q14, and its order book stands at 114 vessels worth a total of US$4.6b.

According to China Association of The National Shipbuilding Industry (CANSI), new ship prices remain subdued as the shipbuilding market is still facing challenging conditions. Pending a meeting with management, we maintain our HOLD rating but put our fair value estimate of S$1.24 under review.

Source: OCBC Research - 7 Nov 2014