Yangzijiang Shipbuilding (YZJ) announced this morning that it had entered into 13 shipbuilding contracts in 4Q14, in which nine were effective orders with a total contract value of US$388m. The nine orders consist of two units of 10,000 TEU containerships that were exercised from existing options and seven new shipbuilding contracts (four 36,500 DWT bulk carriers, two 2,700 TEU containerships and one 64,000DWT bulk carrier). The balance four contracts were new options worth about US$122m.

The contracts are scheduled for deliveries in 2015-2017, and with these, YZJ secured a total of 41 effective contracts in 2014 worth US$1.8b with six outstanding options. This compares to US$2.9b in FY13 and US$0.3b in FY12.

Maintain BUY with S$1.31 fair value estimate.

Source: OCBC Research - 5 Jan 2015