Yangzijiang Shipbuilding (YZJ) delivered a 27% YoY rise in revenue to RMB6.3b and a 38% increase in net profit to RMB824m in 1Q19, such that the latter accounted for 27% and 26% of ours and the street’s full year estimates. Results were within expectations.

15 vessels were delivered in 1Q19, more than the nine vessels delivered in 1Q18. YTD, the group secured new orders for three vessels worth US$116m, and had an outstanding order book of US$3.5b for 101 vessels as at 29 Apr 2019. These orders will keep its yard facilities at a healthy utilisation rate up to 2021.

Meanwhile, management believes that risks relating to global economic growth and trade war tensions still exist and could weigh on the pace of new shipbuilding orders.

Pending an analyst briefing, we maintain our HOLD rating but put our fair value estimate of S$1.44 under review.

Source: OCBC Research - 30 Apr 2019