Riding the LNG momentum
? YZJ has secured orders for 4 units of 8,000 TEU LNG dual-fuel
containerships from PIL. We estimate that these are worth US$100m/vessel.
? YZJ’s YTD order wins total US$990m, which is a positive surprise. Its
orderbook currently stands at US$8.15bn with revenue visibility till mid-FY25.
? Reiterate Add and TP of S$1.63, still based on 10x CY23F P/E (2-year
historical average). We see positive share price movement from this news.
YTD order wins of US$990m; US$8.15bn orderbook for 137 vessels
? YZJ has w on orders for 4 units of 8,000 TEU liquefied natural gas (LNG) dual-fuel
containerships from Pacific International Lines (PIL). These orders w ill be progressively
delivered in Jan, Mar, Apr, and Jun 2025.
? Including the orders for PIL, YZJ has secured YTD order w ins for 16 vessels as of 6 Jul 22. These vessels are: 4 units of 1,800 TEU containerships, 4 units of 8,000 TEU LNG
dual-fuel containerships, 4 units of 66,000 DWT and 2 units of 63,200 DWT bulk carriers,
and 2 units of 36,000 CBM liquefied ethylene gas (LEG) carriers.
? We are positively surprised by the YTD total orders of US$990m given its capacity
constraints till 2024. How ever, deliveries are scheduled till 2025, building earnings
visibility beyond FY24.
? We deem YTD US$990m of order w ins as healthy compared to their average order w ins
of US$1.4bn p.a. in FY09-FY20.
Pivoting to LNG carriers for future growth; positive for its ESG
? We estimate that these 4 units of 8,000 TEU LNG dual-fuel containerships secured from
PIL are w orth US$100m/vessel.
? The 4 units of 8,000 TEU LNG dual-fuel containerships w ill be equipped w ith a selfdeveloped GTT Mark III membrane containment tank system that is ammonia-ready.
Ammonia-ready fuel tanks provide shipow ners w ith the flexibility to sw itch to ammonia,
w hich is a zero-carbon fuel. According to YZJ, the GTT Mark III technology signifies its
breakthrough into Type ‘C’ tanks, w hich can be applied to build larger LNG carriers,
enabling YZJ to further penetrate the clean energy sector and the LNG market.
Reiterate Add and TP of S$1.63
? We think YZJ’s order w ins for the LNG and LEG vessels w ill allow it to catch up to its
Korean peers in terms of valuation. Increasing average LNG vessel prices and YZJ’s
focus on margins further drive future earnings, in our view . We base our TP on 10x
CY23F P/E (2-year historical average). It is currently trading at 5.7x CY23F P/E.
? Re-rating catalysts: faster-than-expected delivery of orders, more order w ins, increase
in dividend payout. Key dow nside risks: sharp rise in steel prices, cancellation of orders.