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Yangzijiang Shipbuilding Rising tide
■ Encouraging rise in ocean rates and positive outlook by liners could spur newbuild orders. YZJ’s c.U$700m orders YTD are on track to hit US$1.1bn. ■ With yard operations at 100%, we expect YZJ’s 3Q20F net profit to be steady qoq at Rmb700m-750m, relatively stronger than Singapore yards. ■ The stock is cheap at 0.5x P/BV and 5x P/E ex-cash. Add. Our SOP-based TP implies c.0.8x CY20F P/BV (-0.5 s.d. of mean). New orders are catalysts.
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Wilmar International Mind the gap!
■ YKA rose 118% to Rmb56 per share yesterday (IPO price: Rmb25.7/share). ■ This is not reflected in Wilmar’s share price, which fell 6.4%, suggesting that the holding company is underappreciated with its trailing market cap. ■ We continue to think Wilmar represents a cheaper and more liquid entry into YKA and the gap will likely narrow — favouring Wilmar. Reiterate Add.
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UOB KAYHIAN |
UOB KAYHIAN |
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Centurion Corporation (CENT SP) Strong Performance Amid COVID-19 Impact
As one of the largest workers’ dormitory operators in Singapore, Centurion offers good earnings visibility with its resilient business model and favourable long-term supplydemand dynamics following the COVID-19 trough. Its shares currently trade at a trough of 0.47x 2020F P/B – providing an opportune time to buy into the stock, given the increased likelihood of a vaccine discovery. Initiate coverage on Centurion with a BUY and target price of S$0.44, implying 30.7% upside.
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China Sunsine Chemical (CSSC SP) Aniline Prices Showing Recovery
Supported by growth in vehicle sales in China for the fifth consecutive month. ASPs of rubber accelerators are seeing a recovery. We believe growth in China vehicle sales should continue in the foreseeable future given the country’s low vehicle penetration and an expanding middle class. Upgrade to BUY after raising the valuation peg to 2.5x EV/EBITDA. The new target price of S$0.48 implies a 2021F PE of 8.0x and ex-cash of 3.5x.
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Check out our compilation of Target Prices
