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Yangzijiang buys back 5m shares, readies cash for more share buybacks

MAINBOARD-listed Yangzijiang Shipbuilding (YZJ) has repurchased five million of its shares for S$4.5 million.

The shipbuilder said after Wednesday's trading close it bought back these shares in the open market on May 30. It also indicated that with 5.6 billion Chinese yuan (S$1.2 billion) of cash and cash equivalents on hand, it is ready to conduct ongoing share buybacks to bolster its share price.

The share buyback was exercised amid the weak performance of YZJ's shares recently. Its share price declined by 13 per cent to a 15-month low on high trading volumes in the past five trading days.

YZJ added that its shipbuilding business is running stably, with yard utilisation ranging around 90 per cent in April.

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As at Mar 31, 2018, the shipbuilder had an outstanding order book of US$4.5 billion, with revenue projected to last through the next 2½ years.

Its net asset value stood at S$1.40 as at Mar 31, 2018, based on a Singdollar to Chinese yuan exchange rate of 4.78.

YZJ's executive chairman Ren Yuanlin said: "YZJ has been a listed company for 11 years. We understand the power of market forces and we are confident in the value embedded in YZJ's shares. As price declines, value becomes more prominent."

He added that the shipbuilder has also extended a provision that would buffer its bottom line against unfavourable exchange rate and steel price movements.

"In 2017, when the Chinese yuan strengthened against the US dollar and steel price increased, we made a provision of 1.2 billion yuan on part of our order book … As long as the exchange rate and steel price don't move beyond our conservative assumptions, there is still chance for these orders to make a profit."

Mr Ren also pointed out that YZJ remains focused on building up its liquefied natural gas-related shipbuilding business.

"We build value in the company and we hope to share the returns with long-term value investors," he said.

YZJ closed at 92.5 Singapore cents on Wednesday, down 2.5 Singapore cents.