Yangzijiang Shipbuilding / YZJSB ($1.45, up 0.10) announced that in addition to the previous order wins announced on 25 April 2023, 25 June 2023 and 26 June 2023 respectively, the Group has successfully
secured new orders for a total of 37 vessels. The 37 vessels secured will be delivered between 2025 and 2027. With these latest order wins, year-to-date, the Group has secured new orders for 69 vessels worth
approximately USD5.6 billion, significantly exceeding its year 2023 target of USD3.0 billion, achieving the highest ever total outstanding order-book value of USD14.60 billion for 180 vessels.
Separately, YZJSB has also secured a contract to build six 9,000TEU methanol dual-fuel containerships from A.P. Moller – Maersk (“Maersk”). This was the Group’s first order win for methanol dual-fuel containerships. The continued order win for green vessels is a testament to Yangzijiang’s technological capabilities and engineering know-how in delivering alternative fuel solutions to the industry. The six vessels secured will be fully constructed in-house and due for delivery between 2026 and 2027. According to the International Maritime Organisation (“IMO”), green methanol is reported to be able to reduce nitrogen oxide (NOx) by approximately 45% and sulphur oxide (SOx) by approximately 8%
compared to conventional fuels per unit energy.
Mr. Ren Letian, Executive Chairman and CEO of the Group, commented on the order win, “We are delighted to secure our maiden order for methanol dual-fuel containerships, following our inroads into the green vessel space. These vessels will strategically replace the current capacity within Maersk’s fleet, which is in line with our ongoing efforts to support the maritime industry’s green fleet renewal trend. Following the regulatory changes by the IMO, the shipping industry is on an accelerated decarbonisation trajectory. On that basis, we are optimistic in gaining further grounds in the near term.”
Earlier in the week, YZJSB also announced that it has been awarded a contract from Norway based Klaveness Combination Carriers ASA (“KCC”) for the construction of three (3) 83,300DWT third generation CABU (“CABU III”) vessels, due for deliveries in 2026. The CABU (III) vessels are combination carriers, which are designed to solve the inefficiencies found in the shipping industry. Single-purposed vessels like tankers and dry bulk carriers are more likely to sail empty and unladen to their pick-
up destinations. On the other hand, combination carriers are capable of transporting both dry and wet bulk cargoes, such flexibility increases the odds of vessels being utilized in both legs of the journey. The newbuilds are set to replace KCC’s older CABU vessels and are expected to reduce overall carbon dioxide (“CO2”) emissions by approximately 35% due to better fuel-efficient features including wind assisted propulsion and improved cargo carrying capacity.
From 2019 to 2021, the Group successfully delivered eight (8) CLEANBU combination carriers to the Norway-based company. The vessel design for CLEANBU gained industry accolades for its technological sophistication. The return order is a testament to the workmanship and engineering prowess demonstrated by Yangzijiang.
Mr. Ren Letian, Executive Chairman and CEO of the Group, commented on the order win, “We are grateful for the immense trust placed in us by KCC and are honoured with the repeat order placed. Assisting our customer’s decarbonisation efforts, the new vessels will be equipped with greater fuel-efficient solutions such as wind-assisted propulsions. In addition, the inherent efficiency of combination carrier design will also help reduce the carbon footprint of the industry due to the reduction of idle sailing. ”
YZJ Shipbuilding’s market cap stands at S$5.7bln and currently trades at 9.5x forward PE and 1.75x PB, with a dividend yield of 3.5%. Consensus target price stands at S$1.63, representing 12.4% upside from current share price. The stock has performed solidly since presenting at our TR & Client event last year, but we believe prospects remains bright with record order wins/books, hence we maintain BUY.