Yangzijiang Shipbuilding (YZJ) reported a 73% YoY rise in revenue to RMB4.7b and a 49% increase in net profit to RMB667.7m in 1Q17, such that both figures accounted for 37% of our full year estimates, and are above ours and the street’s expectations.

There was higher revenue from the shipbuilding business, mainly due to recognition of revenue of RMB551m on the resale of four 82,000DWT bulk carriers in 1Q17 which were terminated previously in FY16.

The trading business also reported higher revenue of RMB1.5b in 1Q17 vs. RMB430m in 1Q16. In 1Q17, the group secured new orders of US$318m. In comparison, new orders for 2016 and 2015 were US$820m and US$2.25b, respectively.

We will obtain more details from an analyst briefing later; prior to this set of results we had a HOLD rating and fair value estimate of S$0.96 on the stock.

Source: OCBC Research - 28 Apr 2017