Yangzijiang Shipbuilding - OCBC Investment 2022-04-22: Back To Shipbuilding And Shipping

YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6)

Yangzijiang Shipbuilding - Back To Shipbuilding And Shipping

Yangzijiang Shipbuilding trades ex-entitlement on 22 April 2022; Yangzijiang Financial to be listed on 28 April 2022.
Potential re-rating of core shipbuilding business subsequently with a cleaner entity.
ESG rating has remained for past few years.

Following the approval of shareholders for the spin-off of the investments arm of Yangzijiang Shipbuilding (SGX:BS6), the stock of Yangzijiang Shipbuilding will trade on an ex-entitlement basis today.
Yangzijiang Financial Holding (SGX:YF8) will then be listed on the SGX on 28 April 2022.

As mentioned in our earlier report Yangzijiang Shipbuilding - OCBC Investment 2022-04-12: Increased Transparency Post Potential Investments Arm Spin-off, increased transparency on Yangzijiang’s investments arm would result from the spin-off, especially the value that the market accords on the investments division subsequently. The market would probably look to the valuations that Chinese banks are trading at, while keeping in mind that larger Chinese banks may have a more developed system of credit controls and evaluation.
As for the core shipbuilding business left in Yangzijiang Shipbuilding, it is possible for it to see some re-rating post the spin-off, since this removes an overhang for the stock, leaving for a cleaner, shipbuilding-focused entity.

Indeed, the shipbuilding arm is seeing a recovery in the industry, and Yangzijiang Shipbuilding has 157 vessels worth US$8.5b in its orderbook. 12 new vessel orders were secured in 2H21 as the group’s yards are full till financial year ending Dec 2024 (FY2024) and management remains selective on orders.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-04-22

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