Shares & Derivatives
Yangzijiang Shipbuilding – Cash rich yield play
By SmallCapAsia  •  May 17, 2022
Excerpts from CGS CIMB report
  • With the successful spin-off of YZJFH, Yangzijiang Shipbuilding investors’ grouse of ‘shadow banking’ from its debt investments should dissipate, re-rating the stock.
  • We adjust our model to ‘carve-out’ YZJFH, arriving at a new TP of S$1.63 (10x CY23F P/E and implied 1.7x FY22F P/BV, supported by its 15% ROE).
  • Strong cash conversion cycle should put YZJ in Rmb4.9bn net cash by end FY22F. We pencil in a DPS of 5 Scts (39% payout) for FY22F, a 5.7% yield.
  • Key investment thesis in YZJ now lies on its strong shipbuilding execution, attractive valuations of 6x CY23F P/E, and potential higher dividend payout.
Yangzijiang Shipbuilding has room for higher dividend We adjust our valuation model for Yangzijiang Shipbuilding now based on a ‘carve-out’ model which excludes its debt securities entity YZJ Financial Holding (YZJFH). We estimate the dividend payout of YZJ’s historical shipbuilding to be in the range of 23-35% or 1.65-2.63 cents. We estimate FCF of...
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By SmallCapAsia
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