YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6)
Yangzijiang Shipbuilding - Higher Tides
- Securing more orders as industry recovers.
- Outstanding order book of US$3.1b.
- Monitoring level of competition from fellow yards as well.
YZJ's price action since last report
- Since our last HOLD-rated report on 28 September 2020; Yangzijiang Shipbuilding - OCBC Investment 2020-08-28: Diversifying Its Portfolio, Yangzijiang's share price has risen 10% compared to the 22% appreciation by the Straits Times Index (based on closing prices on 3 March 2021).
- See Straits Times Index STI Constituents' Share Price Performance.
YZJ's FY20 results in line
- Yangzijiang Shipbuilding (SGX:BS6) reported a 37% fall in revenue to RMB14.8b and a 19% drop in net profit to RMB2.5b, compared to our forecast of RMB2.6b for FY20. Hence Yangzijiang Shipbuilding’s bottom-line was in line with our expectations.
- In 2020, 45 vessels were delivered according to schedule as compared to 59 vessels in 2019, which mainly contributed to the lower revenue.
- Gross profit margin in the shipbuilding business was higher at 21% in 2020 compared to 15% a year ago, largely due to the construction of more containerships with higher margins and the resale of a 157,000DWT oil tanker. See Yangzijiang's announcements.
Outstanding order book of US$3.1b
- In 2020, Yangzijiang Shipbuilding secured new orders of 54 vessels worth a total of US$1.8b, which was about double that of 2019. This brought its outstanding order book to US$3.1b (83 vessels) as at end Dec 2020, and this should provide a stable revenue stream till end of 2022.
- Encouragingly, Yangzijiang Shipbuilding has maintained its order win momentum since the start of this year, securing shipbuilding contracts for 29 vessels worth US$1.3b year to date.
- As the demand and orders placed for containerships surged on the back of a global container shortage and multi-year high spot container freight rates, the majority of orders were placed for containerships (22 vessels with a total value of US$1.13b).
- Since December 2020, Yangzijiang Shipbuilding has clinched six orders for its ultra-large, 24,000 TEU containerships, the largest containership in the world currently in use.
- See Yangzijiang Share Price; Yangzijiang Target Price; Yangzijiang Analyst Reports; Yangzijiang Dividend History; Yangzijiang Announcements; Yangzijiang Latest News.
- For 2021, management has a target of US$3.5b as there could also be rising competition from Chinese peers aiming for market share.
- With improving prospects in the shipbuilding market, we raise our fair value for Yangzijiang Shipbuilding from S$1.05 to S$1.18 but we would monitor closely the level of competition from fellow yards as well.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2021-03-04
SGX Stock
Analyst Report
1.18
UP
1.050
