Yangzijiang Shipbuilding - OCBC Investment 2021-03-04: Higher Tides

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



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 | https://www.iocbc.com/ 2021-03-04
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.18 UP 1.050



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