Yangzijiang’s 1Q2012 earnings up 7% to RMB1.0 billion

Yangzijiang’s 1Q2012 earnings up 7% to RMB1.0 billion
Revenue grew 12% in 1Q2012 to RMB3.7 billion mainly due to boost in revenue from the Shipbuilding segment
Yangzijiang won US$206.2 million worth of new orders in 1Q2012 for building 7 vessels
Order book stood at US$4.5 billion as at 31 March 2012, comprising 96 vessels

SINGAPORE – 26 April 2012 – Yangzijiang Shipbuilding (Holdings) Limited (“Yangzijiang” or “the Group” or “扬子江船业控股有限公司”), one of PRC’s leading and most enterprising shipbuilder listed on the SGX Main Board, is pleased to announce its financial results for the three months ended 31 March 2012 (“1Q2012”) with 7% increase in net profit attributable to equity holders to RMB1.0 billion. A table on the financial highlights of 1Q2012 is provided below:

The revenue for the Group increased 12% in 1Q2012 to RMB3.7 billion as both Shipbuilding and Investment segments registered growth in revenues.

The revenue from the Shipbuilding segment increased 10% to RMB3.3 billion mainly due to higher revenue recognition from construction and delivery of shipbuilding contracts secured prior to the financial crisis and the inclusion of RMB123.5 million recognized from the ship demolishing business. The Group delivered total of 15 vessels in 1Q2012, according to the schedule.

The revenue from the Investment segment (that comprises of interest income from financial assets, held-to-maturity assets and micro lending business) increased from RMB235.7 million in 1Q2011 to RMB341.9 million in 1Q2012. The increase was mainly the result of year on year increase of amount invested in held-to-maturity financial assets and loans to third party by the Group’s subsidiaries engaged in the micro finance business. Under the Investment segment, the revenue from held-to-maturity investments increased from RMB225.3 million in 1Q2011 to RMB293.0 million in 1Q2012. For the micro finance side, there was an increase in revenue from RMB10.5 million in 1Q2011 to RMB48.9 million in 1Q2012.

Group’s overall gross profit increased 15% in 1Q2012 to RMB1.2 billion and the gross profit margin improved slightly from 32.3% in 1Q2011 to 33.1% in 1Q2012. The margin for the investment segment remained very high but the gross profit margin for the shipbuilding segment eased off a bit from 27.1% in 1Q2011 to 26.4% in 1Q2012. This decline was mainly due to the gross profit margin of the ship demolishing business which is lower compared to that of the shipbuilding business, as the revenue from ship demolishing business was included in that of the shipbuilding segment. Group’s administrative expense increased 50% to RMB104.0 million in 1Q2012 mainly due to the inclusion of expenses incurred by the new subsidiaries acquired after 1Q2011.

Other income, which is mainly interest income generated from the Group’s cash balance, increased by 46% in 1Q2012 to RMB65.6 million. Other gains, which comprises mainly of foreign exchange related gains, increased by 65% in 1Q2012 to RMB205.2 million.

The Group’s net profit attributable to equity holders increased 7% to RMB1.0 billion in 1Q2012 with a marginal decrease in net profit margin from 29.1% in 1Q2011 to 27.6% in 1Q2012. The basic earnings per share increased from RMB24.89 cents in 1Q2011 to RMB26.56 cents in 1Q2012.

The increase in borrowings is due to the fund deployment strategy to further strengthen the Group’s cash position by taking advantage of low cost borrowing. The Group generated RMB407.4 million of net cash from operating activities in 1Q2012. The balance sheet continues to be healthy with RMB4.8 billion of cash and cash equivalents and a net cash position in terms of gearing, as at 31 March 2012.

OUTLOOK/ FUTURE PLANS
The Group successfully delivered 15 vessels in 1Q2012 as per the delivery schedule. Also, the Group secured total of US$206.2 million worth of new orders in 1Q2012 for 7 vessels (as per the announcement made on 20 February 2012). Thus, as at 31 March 2012, the total order book for the Group stood at US$4.5 billion comprising 96 vessels. As at the announcement date, the Group’s wholly-owned subsidiary, Jiangsu New Yangzi Shipbuilding Co., Ltd, has successfully delivered four 92,500 DWT vessels to the Group’s newly set up associate companies. The new associate companies were set up with Döhle (IOM) Ltd. The four vessels were not part of the Group’s existing order book.

2 of the vessels were delivered in 1Q2012 and the remaining 2 vessels were delivered in April 2012.

“The shipbuilding industry in general is going through a consolidation phase and in order for us to maintain the Group’s competitiveness, our strategy is to scale up in the vessel value chain and build larger and better vessels. We are focusing more on developing new vessel models that meet our clients’ demands and are greener, more fuel efficient and with a higher loading capacity. In the long run, our aim is to offer a comprehensive range of products that comprise high-end and sophisticated vessels that are as advanced as the ones produced in South Korea and Japan.”
Mr Ren Yuanlin (任元林), Executive Chairman, Yangzijiang

Moving forward, the Board remains confident of the Group’s financial performance for the year 2012.

Yangzijiang 1Q2012 Results Presentation

Yangzijiang 1Q2012

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