SINGAPORE (Nov 5): OCBC has upgraded Yangzijiang Shipbuilding to “buy” with $1.38 fair value as the business is still a “steady ship” and the stock has corrected.

In 3Q15, Yangzijiang reported a 10% rise in revenue to RMB4.1 billion ($906 million) but saw a 16% fall in net profit to RMB680.7 million, such that 9M15 net profit comprised 75% and 79% of OCBC’s and the street’s full year estimates, in line with expectations.

Nine vessels were delivered in 3Q15 according to schedule, higher than the eight vessels delivered in 3Q14. Gross margin for shipbuilding, however, was slightly lower at 18.5% for 3Q15 vs. 21.1% in 3Q14.

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