Shipbuilder Lures Wave Of Investors

SINCE GETTING LISTED in Singapore in April, China-based Yangzijiang Shipbuilding (Holdings) has drawn a wave of investors as a play on the hot Chinese economy and boom-times in the business. Next month, its shares join a revamped Straits Times Index, which could boost long-term interest in the company.

Yangzijiang certainly hasn't been immune to a broad market selloff, sparked by U.S. economic jitters, that has hit Singapore's China stocks hard. Yesterday, the share-price slid 3.1% to S$1.85 (US$1.27). That is 32% below its S$2.74 peak close on Oct. 18.

With that tumble, many analysts think Yangzijiang is attractively valued. They say its ratio of 2008 price-earnings level to earnings growth is lower than that of Singapore-listed peer Cosco Corp. (Singapore), a unit of giant China Ocean Shipping Group. And they like the fundamentals of Yangzijiang, China's largest nonstate-run shipbuilder by order book.

Last month, the company reported a 68% rise in third-quarter net profit from a year earlier to 224.7 million yuan (US$30.4 million) -- 30% above DBS Vickers's expectation. During November, according to the company, it secured US$204 million of contracts in November, taking its order book to US$5.7 billion.

'With these new orders, they have visibility until 2011 in terms of revenue,' says DBS Vickers analyst Ho Pei Hwa, who has a 'buy' and a S$3.04 12-month price target on the stock.

Of course, there isn't visibility on the global economy, and any substantial economic slowdown would affect shipbuilders. But many analysts believe that with a continuing shortage of vessels, shipyards should stay busy in coming years.

Like many shipbuilders, Yangzijiang is expanding to meet surging demand for carriers of fuel and raw materials, partly driven by China. Ship operators, keen to make the most of the robust freight rate environment, are ordering vessels they will receive years from now.

Yangzijiang, founded more than 50 years ago, picked Singapore to list in part because it is a center for marine stocks. The company offered shares on Singapore's second board at 95 Singapore cents each. At yesterday's close, the stock is 38% above its level on April 18, its first day of trading. Over the same period, the Straits Times Index has declined 1.3%.

Now, the Singapore stock market is relaunching its main benchmark, the Straits Times Index, to boost credibility with global investors, through a switch to the FTSE's selection criteria. The new index, which kicks off Jan. 10, will comprise 30 leading blue-chip companies ranked by market capitalization; Yangzijiang's market cap is about S$4 billion. The same day will see the debut of the FTSE ST China index, a China-play index made up of companies listed in Singapore that have a significant proportion of Chinese ownership.

'Some funds track whatever goes into the benchmark indices,' says fund manager Nicholas Yeo at Aberdeen Asset Management.

As part of the new FTSE ST China index, Yangzijiang could also attract from China's Qualified Domestic Institutional Investor funds, which can invest in certain overseas-listed companies.

'If QDII funds do flow into Singapore, they will probably end up in larger, more liquid stocks like Yangzijiang,' says Credit Suisse analyst Haider Ali, who on Nov. 30 began coverage of Yangzijiang with an 'outperform' rating and a 12-month target of S$2.45.

Mr. Yeo says the index's inclusion of Yangzijiang 'will provide initial interest, but it's about the fundamentals after that.'

Based on Credit Suisse forecasts, Yangzijiang trades at 18 times its projected 2008 earnings, while Cosco is about 21 times and Keppel Corp. of Singapore, which has more rig-building than shipbuilding intrests, 13.5 times. Credit Suisse expects Yangzijiang's earnings to more than double next year, while Cosco's would increase 86% and those of Keppel rise 15%.

With its big order book, Yangzijiang will be under pressure to handle a steep ramp-up in deliveries. There are also risks outside the company's control, such as raw-materials prices, particularly for steel. But analysts say these should be manageable.

Mr. Ali expects that the recent launch of a new yard in the Chinese city of Jingjiang in Jiangsu province, funded with the proceeds of the initial public offering, will further bolster Yangzijiang's order book. 'Essentially they have been getting most orders in the containersegment. Now, with the new yard, they will get bulk orders too,' he predicts.

The new yard has 1,200 meters of deepwater coastline, compared with 719 meters at the company's original shipyard in Jiangyin, China. The yard was completed in October, four months ahead of schedule, something that UBS analyst Hubert Tang sees as a coup for the company.

'In view of the current shopping spree by ship owners and operators, we believe this is a particularly positive development,' he says. Mr. Tang has a 'buy' on the shares and has raised his 12-month target price to S$2.80 from S$2.43 on anticipation of higher profit margins and more ship deliveries.

The new yard will let Yangzijiang add deliveries for 2009 and 2010. Those are ships for which the company should be able to charge a big premium, given the current tightness in the shipping market.

扬子江船厂控股有限公司(Yangzijiang Shipbuilding Holdings Ltd.)今年4月在新加坡上市以来，凭藉中国经济的强劲增长以及造船业的繁荣兴旺吸引到了大批投资者。而该公司股票下个月还将成为新版海峡时报指数的成份股，其长期投资价值将因此得到进一步提升。

美国经济动荡在全球引发了大范围的股市抛售浪潮，新加坡的中国概念股受创严重，而扬子江船厂也未能幸免。该股周三收于1.85新加坡元（折合1.27美元），下跌3.1%。此价格较该股10月18日创下的最高收盘价2.74新元回落了足足32%。

不过许多分析师认为扬子江船厂的股价经回调后已颇具吸引力。他们表示，目前扬子江船厂的2008年预期市盈率与利润增幅之比低于在新加坡上市的"同胞"──中远投资（新加坡）有限公司(Cosco Corp.(Singapore) Ltd.)。后者是中远集团(China Ocean Shipping Group)旗下的一家子公司。而且分析师很看好扬子江船厂的基本面，因为以订单计算该公司是中国最大的非国营造船厂。

上个月，扬子江船厂宣布第三季度净利润较上年同期增长68%，达到人民币2.247亿元（合3,040万美元），较DBS唯高达(DBS Vickers)的预测高出30%。该公司11月份又宣布，当月敲定了价值2.04亿美元的订单，订单存量因此达到57亿美元。

DBS唯高达分析师Ho Pei Hwa表示，有了这些新订单，扬子江船厂2011年之前的收入都有了保证。他对该股的评级为"买入"，并将该股未来12个月的目标价定为3.04新元。

当然，现在全球经济的前进道路可谓浓云密布，任何大的闪失都会连累造船业。不过许多分析师认为，由于货轮数量仍然不足，未来几年造船业都不愁没生意做。

像不少造船厂一样，扬子江船厂也将生产重心放在运输燃料和原材料的货轮上，一定程度上正是中国在推动此类货轮的需求急剧增长。船舶运营商们一心想利用运费高企的机会大挣一笔，因而纷纷订造新船，不过这些船也要数年之后方能交付使用。

扬子江船厂已有五十多年历史，之所以选择新加坡上市是因为有大量的航运股云集于此。该股今年4月18日在新加坡二板市场上市时的发行价为每股0.95新元。按照周三收盘价计算，其上市以来的涨幅为38%，而同时期海峡时报指数下跌了1.3%。

为了提高新加坡股市的国际信誉，新加坡按照富时指数公司(FTSE)的选股标准对海峡时报指数进行了重新包装。新版海峡时报指数将于明年1月10日启用，由按照市值挑选出的30只领先蓝筹股组成，扬子江船厂的市值约为40亿新元。同时推出的还有富时海峡时报中国指数(FTSE ST China index)，其成份股均为在新加坡上市、而大部分股权由中国方面持有的公司。

安本资产管理公司(Aberdeen Asset Management PLC)的基金经理姚鸿耀(Nicholas Yeo)表示，有一部分基金只要是基准指数的成份股就会跟进。

作为富时海峡时报中国指数的成份股，扬子江船厂还会吸引到中国合格境内机构投资者(QDII)的关注。按规定，QDII可以投资某些海外上市公司。

瑞士信贷(Credit Suisse)分析师海德•阿里(Haider Ali)称，若QDII投资新加坡股市，就有可能选择像扬子江船厂这样市值大、流动性好的股票。阿里从11月30日起开始跟踪扬子江船厂的股票，他将该股的评级定为"强于大盘"，将该股未来12个月的目标价定为2.45新元。

Nicholas Yeo则表示，扬子江船厂的指数成份股身份一开始会为其吸引到投资者，但在此后还是要回归到基本面上。

根据瑞士信贷的预测，扬子江船厂2008年的预期市盈率为18倍，而中远投资为21倍，新加坡的吉宝企业(Keppel Corp.)则为13.5倍。不过吉宝企业钻井平台建造业务的比重要高于造船业务。瑞士信贷预计扬子江船厂2008年的盈利将比2007年增长一倍，而中远投资预计将增长86%，吉宝企业则增长15%。

在积压大量订单的情况下，扬子江船厂将面临赶工交货的压力。此外，还存在一些不受其控制的外部风险，例如原材料价格，特别是钢材价格。不过分析师认为，这些风险均在可控程度内。

阿里表示，扬子江船厂利用上市募集的资金在江苏靖江市建造的新船厂将使该公司吸引到更多订单。他说，扬子江船厂目前的订单主要集中在集装箱货轮方面，有了新船厂后，也可以承接散装货轮订单了。

这家靖江船厂有1,200米的深水岸线，相比之下该公司在江阴的老船厂只有719米的岸线。新船厂于今年10月竣工，较计划提前了4个月。瑞士银行分析师Hubert Tang认为此可谓该公司的一大利好。

Hubert Tang表示，鉴于船舶运营商和船主们现在都在抢购新船，因此我们认为新船厂竣工乃重大利好消息。他对扬子江船厂的股票评级为"买入"，并将该股未来12个月的目标价由2.43新元上调至2.80新元，原因是他预计该公司利润率将上升，并会有更多新船交付使用。

凭藉新船厂，该公司的新船交付能力将在2009至2010年踏上一个新台阶。而在航运市场目前运力短缺的情况下，这些新船将为该公司创造丰厚的利润。
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