Yangzijiang (YZJ) 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. It operates two shipyards, with the older yard located in Jiangyin city. The yard spans about 800 m of deep-water coastline and covers an area of about 200,000 sqm (excluding the coastal area). YZJ’s newer yard is located in Jingjiang city. The yard has 1,940 m of deep-water coastline, production area of 1,508,857 sqm, a drydock that can accommodate two 100,000 dwt vessels and two half 100,000 dwt vessels at one time.
Chinese yards working round the clock to meet rising global orders. Chinese state media reported that industry analysts are expecting the Chinese shipbuilding sector to reclaim its top position in 2H22 as shipbuilders there ramp up to meet demand. According to Clarksons Research, 5M22 global new ship orders stood at 16.25m compensated gross tons, with China attaining a global market share of 44.1%. As port congestion in the US and Europe persists, as well as the geopolitical situation in Europe, global demand for new ships will grow, offering a large market for both China and South Korea.
Secures additional orders for green vessels. YZJ announced that it clinched orders for four 8,000 TEU LNG dual-fuel containerships by repeat customer PIL and will be progressively delivered in 2025. The vessels will be equipped with a membrane containment tank system that was co-developed in-house, and demonstrates its focus on moving up the value chain to more complex LNG vessels. The orders bring total new orders secured YTD to USD990m for 16 vessels. As at writing, YZJ has a total order book value of US$8.15bn for 137 vessels, which is expected to keep its yard facilities at a healthy utilisation rate till mid-2025.
Undemanding valuations with an expected surge in DPS. The Street is fairly bullish on YZJ’s prospects with 7 BUY, and only 1 HOLD ratings, and an average 12M TP of S$1.41. The street expects FY22F EPS to decline 27.5% YoY after a strong FY21. Thereafter, YZJ is expected to grow its FY23F EPS by 17.9% YoY. Notwithstanding, the street is expecting FY22F DPS to surge 5.9x to S$0.053/share and FY23F DPS to grow at a more steady 11.3% YoY to S$0.059/share. YZJ is currently trading at an undemanding 6.3x and 5.4x FY22F/23F P/E and 5.8%/6.4% FY22F/23F dividend yield respectively.
