- BUY Entry – 0.98 Target – 1.08 Stop Loss – 0.93
- Yangzijiang is China’s largest private shipbuilder. The Group produces a range of commercial vessels, including mini bulk carriers, bulk carriers, multi-purpose cargo vessels, containerships, chemical tankers, offshore supply vessels, rescue and salvage vessels and lifting vessels. Yangzijiang has been at the forefront of shipbuilding in China.
- Reopening of Shanghai’s port to spur shipping activities. China’s shipping industry is bracing for an uptick in demand and freight costs as manufacturing activity in Shanghai roars back to life following the end of a two-month lockdown. Although it was operational during the citywide lockdown, capacity was largely restrained because of the reduced availability of goods. Congestion at the port of Shanghai is also steadily normalising, though the level remains high for this time of the year, according to data from VesselsValue, a shipping data provider.
- Recovery of export and import activities. Official and private surveys showed China’s factory activity contracted at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, with a gauge on export orders improving. Exports in May likely grew 8.0% from a year earlier, accelerating from a 3.9% expansion in April, according to a median forecast in a Reuters poll of 28 economists. Official data showed the average daily container throughput at the Port of Shanghai rose 7% in May from a month earlier.
- A record year for orderbook. In 2021, the group secured record order wins for 124 vessels with a total contract value of US$7.41 billion. The group has focused on building containerships and clean energy vessels which typically demand higher margins given their higher value-add over dry bulkers and tankers. As at the end of 2021, Yangzijiang had an orderbook of US$8.5bn for 157 vessels, with containerships accounting for >US$7bn or 83% of total existing contract value.
- Positive consensus estimates. Currently, Yangzijiang Shipbuilding has a consensus rating of 7 BUYS, 1 HOLD and 0 SELL, with a 12M TP of S$4.63. The company is currently trading at 5.69x/5.10x/5.15x P/E to its FY22/23/24 EPS.
(Source: Bloomberg)