Yangzijiang Shipbuilding kept 'buy' on 2009 recovery prospects

UBS maintained a "buy" recommendation on Yangzijiang Shipbuilding, saying that falling steel costs and a recovery in demand should lead the shipbuilding sector out of its trough in the second half of this year.

In current market conditions, weaker and less efficient shipyards are also likely to be squeezed out of the market, UBS said.

A 47 pct fall in medium plate prices will begin to show in Yangzijiang's financial results in the first half of 2009, it said.

The global financial crisis has had a severe impact on global trading volumes, leading to postponements and cancellations of ship deliveries, but Yangzijiang already offering rebates to certain clients and setting aside provisional losses in the event that its clients default, it noted.

UBS has a target price of 1.30 sgd for the Singapore-listed Chinese firm. The shares last traded at 0.49 sgd.

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