Yangzijiang Shipbuilding Holdings Ltd (YZJ SP; S$1.29) |
| Yangzijiang requested for a trading halt this morning. |
| Over the lunch break, Yangzijiang clarified that it has received proposals for dual listing on the Stock Exchange of Hong Kong and TDR listings. However, all talks are only exploratory at this juncture. If Yangzijiang does proceed with alternative listing options, our recent meeting with management suggests that a TDR listing in Taiwan is more likely as the listing process may be faster. However, as TDRs are non-fungible, there is a low likelihood for a sustained surge in trading multiples for the SGX-listed shares from higher TDR valuations. Moreover, the closest peer in Taiwan is trading at a lower valuation. |
| Still, we remain bullish on the Company, due to management’s excellent execution record as the company had coped well with industry negatives with zero order cancellation to date, on-schedule deliveries, and ability to secure new contracts of about US$460m in 2009 despite the industry-wide drought and relatively superior margins. |
| Catalysts for the stock include stronger-than-expected order wins and share of profits from its new ship-breaking JVs, and confirmation of TDR listing. |
| YZJ remains one of our two top-picks among S-Chips with potential for dual listings. At the current price, the stock offers 16.3% upside to our target price. |
| Maintain Outperform, target price of S$1.50. CIMB |
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework.
ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
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