Brokers' take: OCBC Investment Research downgrades Yangzijiang Shipbuilding to 'hold'

OCBC Investment Research has called a "hold" on Yangzijiang Shipbuilding, citing diminishing upside, even as its fair value estimate on the stock has risen to S$1.32 from S$1.23.

Shares in Yangzijiang were trading at S$1.28 at around 9.45am on Wednesday, easing from that morning's high of S$1.30.

"While the momentum may continue in the near term, the upside potential for the stock is diminishing," wrote analyst Low Pei Han in a research note. The counter has risen over 50 per cent from a trough of S$0.85 on July 6. "We also note there seemed to be a pause relating to the group's share repurchases."

Yangzijiang started share buy-backs in end-May and proceeded to do so till mid-July, with prices ranging from S$0.86 to S$0.98 per share.

She highlighted that while the weaker renminbi works in Yangzijiang's favour, higher steel prices may weigh on margins.

"As for new orders, we continue to believe that the group is likely to hit its full-year target of US$1.8 billion by the end of this year, after securing new orders worth about US$0.98 billion so far."

The group's outstanding order book is US$4.1 billion, which should keep its yard facilities busy up to 2020.