Stock Call: YZJ remains its top pick among Chinese shipbuilders

[LEFT]0537 GMT 4 July [Dow Jones] STOCK CALL: The required relocation of Yangzijiang Shipbuilding’s (BS6.SG) smallest shipyard by end-March offers a “sweet deal,” Macquarie says. “Given the current overcapacity in shipbuilding (especially Chinese yards), we believe the 17% capacity reduction is highly timely. As a result, YZJ will benefit from better adapting its operations to current industry conditions and reducing overhead from excess capacity.” It adds, YZJ will be entitled to sizable compensation of CNY720 million and the company also indicated it could participate alongside the municipal government in redeveloping the vacated land. Macquarie expects minimal disruption and a smooth transition due to a long lead time. It keeps an Outperform call with S$1.55 target, saying YZJ remains its top pick among Chinese shipbuilders due to strong fundamentals and superior balance sheet. The stock is up 1.0% at S$1.04.

  • Leslie Shaffer, Dow Jones Newswires[/LEFT]