The main investment merits for YZJ Shipbuilding are as follows:
·
ROE skyrocketed to 28.1% in FY2024 (from 21.3%
in 2023), highlighting its excellent capital efficiency.
·
Net profit surged 61.7% YoY to RMB 6.63 billion, driven by strong revenue growth and margin
expansion.
·
Gross and net margins expanded significantly
(~28.7% gross margin, ~25% net margin), thanks to favorable RMB exchange rates
and lower steel prices.
·
With the current price at $2.37, the P/E is an
attractive 7.55, and the dividend yield of 5.06% exceeds the CPF SA interest
rate.
If new orders—particularly high-margin LNG carriers and
tankers—slow down, margin pressure could quickly erode bottom-line returns.
Additionally, favorable currency and material cost trends, such as a weak RMB
and lower steel prices, may reverse, potentially affecting future
profitability. Barring these risks, the stock price is likely to continue its
upward momentum.
The solid 28.1% ROE confirms that YZJ is not just
profitable, it is producing elite returns for equity holders. With robust
margins, strong earnings growth, and highly attractive valuation multiples, YZJ
stands out as a compelling blend of value and growth.
I estimate YZJ Shipbuilding will rise to $3.77 within the
next six months, bringing it to a more reasonable valuation of 12 times its
earnings and offering an upside potential of 59%.
Superphang
http://superphang.blogspot.sg
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