YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6)
Yangzijiang Shipbuilding - Steady Hands At The Helm
- Continues to execute well despite COVID-19 lockdowns and supply chain disruptions.
- Re-rating of Yangzijiang's share orice has materialised.
- ESG rating upgraded in April 2022.
32% growth in Yangzijiang's net profit from continuing operations
- With the spin-off of the investments arm of Yangzijiang Shipbuilding (SGX:BS6) a few months ago, the group reported a 32% rise in net profit from continuing operations to CNY1.2b in 1H22, with shipbuilding revenue rising 78% y-o-y to CNY8.5b on the back of record vessel delivery and shipping revenue increasing 37% to CNY561m, underpinned by an expanding charter fleet and higher charter rates.
Re-rating of Yangzijiang has materialised
- As mentioned in our earlier reports Yangzijiang Shipbuilding - OCBC Investment 2022-04-22: Back To Shipbuilding And Shipping, there would likely be a re-rating for the stock post the investment arm’s spin-off, since this removes an overhang for Yangzijiang Shipbuilding, leaving for a cleaner, shipbuilding-focused entity.
- Indeed, Yangzijiang's share price has re-rated from about 3.5x forward price-to-earnings (P/E) at the start of this year to about 6.3x currently, while price-to-book (P/B) has moved from about 0.4x previously to close to 1x currently, which we deem as fairly valued.
- Looking ahead, should the group outperform in terms of order wins (e.g stronger than expected recovery in shipbuilding orders or market share gains), or clinch more orders in the green shipbuilding segment, there is the potential for further re-rating in the future.
Continues to secure orders and demonstrate good execution abilities amidst COVID-19 lockdowns
- Despite the COVID-19 lockdowns in China and supply chain bottlenecks, Yangzijiang Shipbuilding demonstrated resilience by delivering 35 vessels in 1H22, in line with its delivery target of 70 vessels for 2022.
- Year-to-date, Yangzijiang Shipbuilding has secured new order-wins of US$1.09b for 18 vessels, bringing the total outstanding orderbook to US$8.1b for 134 vessels.
- Looking ahead, as the shipbuilding industry is moving towards decarbonisation, Yangzijiang Shipbuilding is also pivoting to clean energy sectors and clinched orders for four units of 8,000 TWU LNG dual-fuel containerships that will carry the GTT Mark III technology with an ammonia-ready fuel tank, as well as two units of Liquefied Ethylene Gas carriers.
- See
- Rolling over our valuations, our fair value estimate for Yangzijiang Shipbuilding is revised from S$0.90 to S$1.00, along with the slight improvement in its ESG rating.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2022-08-08
SGX Stock
Analyst Report
1.00
UP
0.950
