Thursday, January 17, 2013

Yangzijiang

Yangzijiang: Recall yesterday the Company proposed a placement of 330m warrants at an issue price of Rmb$0.3072 (S$0.0605), with each warrant carrying the right to subscribe to one new ordinary share in the company at Rmb$7.617 (S$1.50). CS noted that the warrants issue reflects their two key concerns for the sector namely, 1) continued cash outflow due to contracts on the back-end loaded payment terms, and (2) negative earnings risks from depletion of shipbuilding orderbook. However, CIMB thinks that corporate developments are more likely, potentially for offshore projects and property development, given Yangzijiang's strong balance sheet of Rmb$10b of financial assets and a net cash position. CS is NEUTRAL on YZJ with a TP of $1.10, with a cautious view on the sector.

No comments:

Post a Comment