Order win could reach US$4bn-5bn in 2023
? YZJSB has secured three 83.3k dwt combination carriers from Norwegian KCC for 2026 delivery. We estimate contract value range of US$169m-180m.
? Separately, industry news outlets reported that YZJSB could ink large-sized contracts worth US$1.4bn to US$3bn from Maerks and CMA CGA.
? If all the recent order news flow materialises, YZJSB’s order wins for 2023 could reach US$4bn-5bn, surpassing its US$3bn guidance.
? YTD wins stood at US$1.18bn, with order book as at end-Apr at US$10.98bn.
? We believe capex commitment towards decarbonisation will lead to orders.
? YZJSB could be a rotation candidate in FSSTI as share prices of peers in capital goods sector have done well YTD. Maintain Add and TP of S$1.66.
Repeated order of combination carriers from KCC
YZJSB has been awarded a contract from Klaveness Combination Carriers ASA (KCC) to build three 83.3k dwt third generation CABU vessels (CABU III) for deliveries over 1Q-3Q 2026. According to KCC’s website, the letter of intent (LOI) signed with YZJSB indicated cost/ship of US$56.4m-60.5m. The vessels could reduce CO2 emissions by 35% on fuel efficiency and carrying capacity compared to the previous vessels delivered in 2021.
CMA CGA contracts worth US$2bn to US$3bn
According to industry news outlet Tradewinds, French liner CMA CGA could have selected YZJSB to build 10-12 units of methanol dual-fuel large-sized 24k TEU containerships. It also estimated prices were c.US$200m-250m apiece. These vessels could be scheduled for delivery from 2026 onwards. YTD, CMA CGA has ordered 18 dual-fuel containerships worth more than US$2bn (12 units from Hyundai Samho Heavy Industries and 6 from Jiangnan SY Group). These vessels are 13k-15k TEU in size.
Push for greener vessels leading newbuild wave
Various industry news outlets also reported that Dutch liner AP Moller-Maerks has signed an LOI with YZJSB for 8 firm units plus options for 4 Panamax size 8k TEU methanol dual fuel containerships for 2025 delivery. Each vessel is estimated to be US$115m. Although YTD containership rates have declined (23 June Shanghai Containerized Freight Index averaged 966 in June 23 vs. peak of 5,094 in Jan 22), major liners are still profitable and committed to decarbonisation. Maersk in its 1Q23 earnings call maintained capex guidance of U$10bn-11bn for 2023-2024, led by integrator strategy, technology and decarbonisation.
Rotation candidate; Add call, TP stays at S$1.66 (1.7x CY23F P/BV)
There have been other news about YZJSB clinching c.US$770m bulk and product carrier orders from Lepta Shipping and Zodiac Marine. This means order wins could reach US$4bn-5bn, exceeding its US$3bn target win for 2023. We believe order win newsflow is a near-term catalyst and see flows rotated into the stock. Downside risks: sharp rise in steel costs eroding margins and order cancellations weakening its earnings visibility.
