Wonder how much of losses YZJ will have with divesting the HTM investment, especially when it is heavily geared to property sector which is on a downtrend and the investments have not been "held to maturity"? Still have 10b+ RMB to divest.
Without steady earnings coming in from increasing order book, the balance sheet will start looking pretty shaky very quickly.
(06-04-2015, 10:34 PM)greengiraffe Wrote: [ -> ]Just a few devils advocate here for Chinese yards in general:
i) RMB has been strong while labour costs in mainland is also rising that will add on to the costs of Chinese yards relative to the traditional powerhouse in Japan and Korea
ii) weak global shipping charter rates as a whole will slow capex for replacement vessels in general
iii) the current glut in global O&G, commodities will have flow on effect on the various segments of the global offshore sector. Eventually the slack in demand will result in excess capacity for global ship building and repair businesses - no viable businesses globally will sit back and wait for businesses to come to them, ie competition amongst yards globally can expect to stiffen and I do not think that many analysts have actually got much clue on how dire the situation can be.
iv) there is no doubt YZJ is a well managed Chinese yard. However, in view of the various headwinds, it pays to be cautious. Baring in mind that marine industry is a global business and not a domestically driven one even though Chinese demand for commodities globally may result in a baseline demand for vessels needed for transportation of these commodities.
No Vested Interests
GG
(06-04-2015, 09:10 PM)CityFarmer Wrote: [ -> ]Deutsche Bank view on the company.
Yangzijiang stands out from crowd but not spared industry woes: Deutsche Bank
SINGAPORE (April 6): Yangzijiang Shipbuilding is a key beneficiary of the ongoing consolidation in China's shipbuilding industry, but it will not be spared challenges arising from the current sector-wide slowdown, says Deutsche Bank.
China now has only 60 to 70 active shipyards, down from more than 2,000 a few years ago, according to Deutsche Bank analyst Kevin Chong, citing feedback from Yangzijiang's management.
These active yards are those that are still receiving new orders, continue to be supported by banks, and can deliver the projects on hand.
"Yangzijiang will be a key beneficiary of the Chinese shipbuilding industry consolidation in light of its healthy experience, product quality and customer recognition," Chong wrote in a note today.
"However, new vessel orders in China will likely slow down given weak ship-chartering rates and subdued customer sentiment, and offshore & marine orders should be negatively affected by low oil prices," he said.
Yangzijiang's order book as at Dec 31 was US$4.6 billion ($6.2 billion), comprising 96 bulk carriers worth US$3.2 billion and 20 container ships worth US$1.4 billion.
The company has indicated it will dispose of its investments in non-related assets, mainly its held-to-maturity financial investments, which it has reduced from RMB14 billion ($3.1 billion) in 2013 to RMB10.8 billion last year.
Deutsche Bank has a "buy" rating and $1.40 price target on Yangzijiang.
Yangzijiang shares ended 0.8% higher at $1.295 today.
http://www.theedgemarkets.com/sg/article...tsche-bank
Just my 2 cents worth.
In terms of outlook, if u ask me is it very much different from 1-2 years ago, I would say more or less status quo or slightly worse taking into account the rig market is not going to provide the "growth", but price has steadily increased, it would mean less MOS now.
In term of costs, steel and engine components form the bulk of building costs. I ASSUME steel is source domestically and engine components globally. At such, YZJ is in a good position to manage cost, at least in the near term.
Global headwinds is migate by adjustment of supply of shipbuilding yards left idle due to the white list.
All in all, I am not vested at current price but it continue to be on my watchlist
(06-04-2015, 11:46 PM)BlueKelah Wrote: [ -> ]Wonder how much of losses YZJ will have with divesting the HTM investment, especially when it is heavily geared to property sector which is on a downtrend and the investments have not been "held to maturity"? Still have 10b+ RMB to divest.
Without steady earnings coming in from increasing order book, the balance sheet will start looking pretty shaky very quickly.
Base on the divestment from 14+ billion to 10+ billion, the "losses" is nil, but the interest income from HTM, was about 1.5 billion RMB in FY2104.
The investment have not been "held to maturity"? I reckon you may need further understanding on the HTM investment
I urge a further look into the balance sheet. Base on the latest segment info in AR2014, the total asset is about 40.5 billion, while liabilities is 13.8 billion. After excluded the investment asset (HTM, and microfinance) of 12.7 billion, the asset is still around 27.8 billion, which can easily cover the overall liabilities of 13.8 billion with a wide margin.
(vested, clarifying the misleading info)
Ship builders like YZJ are in a cyclical industry. It seems that the bottom has already been reached. For cyclical counters, the time to buy is precisely at this moment, when everything is not rosy.
You are right on the RMB currency strength, and labour cost in China, but I reckon the cost still lower than Japan and Korea. The mitigation is to move up the value chain, and productivity improvement, which is happening, and will be accelerated in near future.
The weak global shipping sector, is also right. As Greenrookie has said, the consolidation in China, helps to mitigate. China still a dominance player in shipbuilding, and YZJ is among the best players in China.
Will the global shipping sector become weaker? I guess it should be at low, and the chances of moving up is much higher. Furthermore I am confident YZJ can survive further, with its balance sheet.
I am ready for a long-haul.
(06-04-2015, 10:34 PM)greengiraffe Wrote: [ -> ]Just a few devils advocate here for Chinese yards in general:
i) RMB has been strong while labour costs in mainland is also rising that will add on to the costs of Chinese yards relative to the traditional powerhouse in Japan and Korea
ii) weak global shipping charter rates as a whole will slow capex for replacement vessels in general
iii) the current glut in global O&G, commodities will have flow on effect on the various segments of the global offshore sector. Eventually the slack in demand will result in excess capacity for global ship building and repair businesses - no viable businesses globally will sit back and wait for businesses to come to them, ie competition amongst yards globally can expect to stiffen and I do not think that many analysts have actually got much clue on how dire the situation can be.
iv) there is no doubt YZJ is a well managed Chinese yard. However, in view of the various headwinds, it pays to be cautious. Baring in mind that marine industry is a global business and not a domestically driven one even though Chinese demand for commodities globally may result in a baseline demand for vessels needed for transportation of these commodities.
No Vested Interests
GG
The BDI (Baltic Dry Index) has been dropping quite a bit since Nov last year from ~2000 level to ~550+ levels. It is now at around 30 year lows.
Since there was big increase of shipbuilding orders in late 2013, there is a global glut of ships this year as big ships take around 2 years to complete.
Combine this with China PMI which has been pretty low and lukewarm global economy, shipping rates will likely stay low for a while.
The industry should be just entering the low part of the cycle, with more downside in second half of 2015 as the glut of ships come online when the big orders from 2013 are completed.
Baltic Dry Index: Is This Powerful Indicator Signaling A Global Recession?
-not v-
Bear in mind that the market is full of intelligent, calculating minds and is therefore highly anticipatory in nature. Shipping and ship building are thousand year old industries. Do you think the current downturn will be permanent? Most of the negatives have already been priced in. Now is the time to accumulate strong counters like YZJ that have the capacity to withstand another year or two of headwinds. When the sector recovers, those who bought at the downturn would have hit paydirt.
(Vested)
(07-04-2015, 04:50 PM)Teletubby Wrote: [ -> ]Bear in mind that the market is full of intelligent, calculating minds and is therefore highly anticipatory in nature. Shipping and ship building are thousand year old industries. Do you think the current downturn will be permanent? Most of the negatives have already been priced in. Now is the time to accumulate strong counters like YZJ that have the capacity to withstand another year or two of headwinds. When the sector recovers, those who bought at the downturn would have hit paydirt.
(Vested)
To add-on, fellow shareholders are enjoying the ~5% dividend annually during the waiting time. I have been rewarded with a 30-40% gain, with an average holding period of ~1.5 years.
Mr. Market is likely thinking alike, and starts to pay attention on the company.
(vested)
Analysts start to review the TP of the company, after the recent re-rating. Nothing new in the report, but TP has been "upgraded" to catch up with Mr. Market.
(vested)
Yangzijiang price target raised 36% to $1.90 by Deutsche Bank
SINGAPORE (April 21): Deutsche Bank has raised its price target for Yangzijiang Shipbuilding to $1.90 from $1.40 after increasing its earnings estimates by 20% to 38% to factor in an expected increase in new orders.
...
http://www.theedgemarkets.com/sg/article...tsche-bank
What's new? Analysts finally upgrade the stock's TP after the price has gone up as usual.
(21-04-2015, 03:03 PM)CityFarmer Wrote: [ -> ]Analysts start to review the TP of the company, after the recent re-rating. Nothing new in the report, but TP has been "upgraded" to catch up with Mr. Market.
(vested)
Yangzijiang price target raised 36% to $1.90 by Deutsche Bank
SINGAPORE (April 21): Deutsche Bank has raised its price target for Yangzijiang Shipbuilding to $1.90 from $1.40 after increasing its earnings estimates by 20% to 38% to factor in an expected increase in new orders.
...
http://www.theedgemarkets.com/sg/article...tsche-bank