Hot stock: Yangzijiang up 4.9% after posting H1 net profit growth

SHARES of Yangzijiang Shipbuilding BS6 : BS6 0% are up on Friday after the shipbuilder posted a 39 per cent on-year growth in its net profit for the half-year ended June 30.

The counter reached a high of S$1.51 as at 10.26am on Friday, up S$0.07 or 4.9 per cent.

As at the midday break, the index stock was still trading at its high of S$1.51. It ended the day at S$1.50, up 4.2 per cent from the previous close.

No married deals were recorded in early trade, according to ShareInvestor data.

Yangzijiang on Thursday posted a net profit of 1.6 billion yuan (S$339.6 million) for the first half, despite a drop in vessel sales and trading revenue.

Ren Letian, the group's executive chairman and chief executive, had on Thursday described 2021 as Yangzijiang's "best year" in terms of the value of contract wins and outstanding order book, after it set a record number of new orders for 112 new vessels, with a total contract value of US$ 6.67 billion in the first half of the year.

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The group’s quarterly net profit beat the street’s expectations, DBS Group Research noted.

Yangzijiang also said in its outlook statement that it is looking to review its debt investment portfolio, to allow the group to focus solely on the expansion of its core shipbuilding business.

CGS-CIMB said spinning off the segment would be a major rerating catalyst for the counter as it alleviates investors' concerns over shadow banking, although one might have to "stomach the potential loss of recurring income of interest from debt investment".

DBS also expects the strategic review could uplift Yangzijiang’s fair value by 10 to 20 per cent through reduction of valuation discount and growth in investment income, by providing greater transparency, unlocking the value and optimising the returns of the investment arm.  

READ MORE: Yangzijiang Shipbuilding H1 net profit up 39% amid fall in revenue