Yangzijiang Shipbuilding - Financial Arms Boosts “E” And “G” Metrics
- The separate listing of Yangzijiang Financial Holdings (YZJFH) offers greater transparency and flexibility for investors. The appointment of senior management from MAS, SGX and law firm as directors of YZJFH could contribute to improving corporate governance practices as well.
- Post spin-off of Yangzijiang Financial Holdings, Yangzijiang (SGX:BS6)’s shipbuilding business deserves a re-rate from the currently implied 0.8x P/B and 6x P/E (assumes Yangzijiang Financial Holdings at a 0.7x PB) towards 1.5x P/B and 12x P/E on the back of a 13% ROE, 4%-5% dividend yield, and ~20% earnings CAGR.
- A record-high order backlog of US$8.5bn as of end-2021 will keep Yangzijiang’s yards full through to 2024. We are hopeful of Yangzijiang delivering stronger-than-expected shipbuilding margins for its mainstream containership orders (~80% of orderbook). The dividend payout ratio could also be raised with every 10ppt increase, translating to a 1.5ppt higher dividend yield from the base case of 4%.
- We believe Yangzijiang stock remains undervalued and set for re-rating close to completion of YZJFH listing. Reiterate BUY call on Yangzijiang and target price S$2.15
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Pei Hwa HO DBS Group Research | https://www.dbs.com/insightsdirect/ 2022-03-29 2022-03-29
Previous report by DBS Research:
2022-03-01 Yangzijiang Shipbuilding - Investment Spin-Off On Track
Target prices by 3 other brokers at Yangzijiang Target Prices.
Listing of broker reports at Yangzijiang Analyst Report.
Yangzijiang Share Price History,
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