Yangzijiang Shipbuilding - OCBC Investment 2020-03-02: Not Immune To Covid-19

YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6) | SGinvestors.io YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6)

Yangzijiang Shipbuilding - Not Immune To Covid-19

  • Results within expectations
  • Prolonged COVID-19 a key risk
  • Outstanding order book of US$2.9b



Flattish net profit in FY19; within expectations

  • Yangzijiang Shipbuilding (SGX:BS6) reported a 2% rise in revenue and a 1% increase in net profit to FY19, which was in line with our expectations. This was despite a challenging shipbuilding market in 2019.
  • Amidst US-China trade tensions and the IMO rules on sulphur emissions, most of the shipowners cut or postponed their investment in new vessels.


Outstanding order book of US$2.9b

  • In 2019, the group secured new orders for 21 vessels worth a total of US$830m, such that its outstanding order book stood at US$2.9b as at end 2019. This will keep the group’s yard facilities at a healthy utilization rate up to 2021 and provide a stable revenue stream for at least the next 1.5 years.
  • YTD, Yangzijiang Shipbuilding has secured new contracts for four vessels worth US$104m.


Impact of COVID-19

  • The group’s January operations were not impacted by COVID-19 as yard utilization is normally low due to Chinese New Year celebrations. However, restrictions imposed by the local government for returning sub-contractors have resulted in a workforce level of only about 30% in February, and the impact may continue to be felt in March. It is estimated that at least 80% of the workforce has to return by March for the group to hit its target delivery of 51 vessels this year.
  • Meanwhile, there are also delays in the shipbuilding supply chain across the region. We adjust our estimates lower to factor in more conservative assumptions.
  • For this year, Yangzijiang Shipbuilding still targets US$2b of new orders, seeing good demand for large containerships, but we currently assume US$1.3b of new order wins.


4.5 S cents dividend in FY19






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-03-02
SGX Stock Analyst Report BUY MAINTAIN BUY 1.20 DOWN 1.390



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