Yangzijiang sinks in 14% profit fall

Shipbuilding segment isn't going too well.

According to a release, Yangzijiang Shipbuilding (YZJ) reported a 1% YoY drop in revenue to RMB3.6b and a 14% fall in net profit to RMB877m in 3Q12, such that 9M12 revenue and net profit accounted for 72.5% and 73.3% of our full year estimates.

Results were in line with expectations, with gross profit margin in the shipbuilding segment lower at 22.9% in 3Q12 vs 24.2% in 2Q12 and 27.7% in 3Q11.

Commercial shipbuilding remains challenging and according to the group, consolidation in the industry is now affecting mid-sized and large-sized yards.

There was no vessel cessation and no effective orders secured in 3Q12. As such, YZJ’s order book stood at 75 vessels with a total value of US$3.6b as at 30 Sep 2012. Pending an analyst briefing later, we maintain our HOLD rating but put our fair value estimate of S$1.03 under review.