Singapore Stock Market News

Yangzijiang Shipbuilding - Earnings-decline overhang

StockFanatic
Publish date: Wed, 13 Nov 2013, 08:23 PM
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YZJ's stock could be range-bound after its 21% appreciation since our upgrade in Aug on the back of stronger orders. Although we believe its order momentum can be sustained in the next six months, lower earnings and margins in FY14 could limit further near-term upside.

We downgrade the stock to Neutral from Outperform. 9M13 net profit was in line at 70% of our FY13 forecast though above consensus at 85%. 9M13 order book was US$3.87bn (wins of US$2.1bn by 1 Oct). We raise our EPS for FY15 on higher revenue recognition and roll over our target price to end-FY14, still based on 1.4x P/BV (-1 s.d. of its 5-year mean).
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