Yangzijiang Shipbuilding (YZJ) reported a 22% YoY fall in revenue but saw an 84% rise in net profit to RMB1.2b in 4Q18, bringing full year net profit to RMB3.6b which is a 23% increase compared to FY17. Results beat ours and the street’s expectations, aided by RMB494m of other income in 4Q18 as well as RMB344m of forex gains.

There was also reversal of impairment loss of RMB99m on other investment at amortised costs and RMB91m on loans to nonrelated parties (microfinance) in 4Q18. The group has declared a dividend of 5 S cents, higher than 4.5 S cents in FY17.

Pending an analyst briefing later, we place our Buy rating and fair value estimate of S$1.41 under review.

Source: OCBC Research - 1 Mar 2019