Yangzijiang Shipbuilding acquires additional stake in Xinfu yard

It is a US$18m deal.

According to OCBC Investment Research, Yangzijiang Shipbuilding announced last evening that it has acquired an additional 20% interest in Jiangsu Yangzi Xinfu Shipbuilding for US$18m (~RMB 112.1m). 

Here's more:

Following this, YZJ will hold an 80% interest in the Xinfu yard, which has a huge production area of about 166ha (YZJ’s old yard: 20ha, new yard: 201ha, Changbo yard: 29ha) and is therefore ideal for building large vessels. As mentioned by management previously, the group has plans to build VLCCs, large containerships (e.g. 10,000 TEU) and other vessels in this yard. 

Meanwhile, YZJ has also acquired the remaining balance of 40% interest in Shanghai Henggao Ships Design Co for RMB6m. The latter is engaged in the detail and production design for merchant ships. 

These acquisitions are still relatively small in comparison to the group’s cash position – YZJ had net cash and held-to-maturity assets of RMB2.6b as at Sep 2012. Maintain HOLDwith S$0.95 fair value estimate on YZJ.