YZJ clinches upgrade

Forecasters at a leading Malaysian investment bank are urging clients to accumulate shares of Yangzijiang Shipbuilding on the back of its improved performance in the second quarter.

In a note issued a day after the Chinese shipbuilder reported record earnings Maybank Kim Eng replaced its “hold”  rating with a “buy”, an upgrade analysts based on a bet that the Singapore-quoted company boasts “brighter order prospects” than its peers.

The bank pointed out that the shipbuilding conglomerate secured roughly $1.4bn worth of orders in the first-half of 2014 and claims management is optimistic about the next six months, a period in which it plans to pursue contracts to construct larger and more sophisticated types of ships.

“Despite our view on shipbuilding’s muted recovery this year, Yangzijiang has secured contracts at the expense of its peers, thanks to its expertise, execution and balance-sheet strength,” Maybank added after mentioning that the yard will likely target large containerships and LPG carriers.

The commentary comes at a time when a number of shipyards in South Korea are growing increasingly concerned about Chinese competitors breaking into the LPG market and other segments that are considered more sophisticated than the bulker and tanker sectors.

At last check Yangzijiang boasted $5bn worth of contracts to construct 122 vessels. According to a recent regulatory filing the total includes 25 containerships and 97 bulkers. Of these, 17 are 10,000-teu boxships and 72 involve bulkers with carrying capacities of 64 to 82,000-dwt.

Copies of Yangzijiang’s second-quarter earnings report and other materials that provide a comprehensive overview of the company’s financial performance and strategy going forward can be found under the Related Media section, which is located to the right of this article.