Hot stock: Yangzijiang’s orderbook surges to record high. What’s next for the shipbuilder?

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By Beansprout • 26 Jun 2023 • 0 min read

Yangzijiang Shipbuilding's orderbook rose to a record high of US$14.6 billion, after it announced a wave of orders for newbuild vessels. Find out what this could mean for the share price of Yangzijiang.

Yangzijiang share price record orderbook 27 June

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What happened?

Yangzijiang Shipbuilding announced that it has secured orders for newbuild vessels worth US$4.4 billion in the second quarter of 2023.

This would bring its new orders secured this year to US$5.6 billion, far exceeding its full-year target of US$3.0 billion.

It would also bring the company’s orderbook to a record high of US$14.6 billion.

Let’s dive deeper into the what this could mean for Yangzijiang Shipbuilding and its share price performance. 

What you need to know about Yangzijiang Shipbuilding’s latest mega-order

#1 – Maiden order for methanol dual-fuel containerships

In an announcement on 26th June 2023, Yangzijiang announced it has secured a contract to build six 9,000 TEU dual-fuel containerships from Maersk.

This would represent Yangzijiang’s first order win for methanol dual-fuel containerships, which will be fully constructed in-house. 

According to Yangzijiang, the continued order win for green vessels reflect the company’s technological capabilities and engineering know-how in offering clean energy solutions to its clients. 

Maersk estimates that the new vessels will reduce the company’s annual greenhouse gas emissions by about 450,000 tons of carbon dioxide equivalent (CO2e) per year by replacing vessels in a similar size segment. 

Yangzijiang Maersk order.jpg
Source: Maersk

#2 – Large contract for ten LNG dual-fuel 24,000 TEU containership

In a separate announcement, Yangzijiang announced that it has secured orders for 37 vessels to be delivered between 2025 and 2027

This would include contracts for ten LNG dual-fuel 24,000 TEU containerships.

While the customer was not disclosed by Yangzijiang, industry publication Tradewinds news reported that the order was placed by French shipping giant CMA CGM

For those who might not be familiar with CMA CGM, the shipping giant acquired local container shipping company NOL in 2016. 

According to industry sources, Yangzijiang managed to secure the order after despite competition from Chinese and South Korean shipyards, including shipyards that have previously built similar vessels for CMA CGM.

This order for ten 24,000 TEU containerships is estimated to be about US$2.5 billion, based on a price tag of about US$250 million per vessel. 

The order is also meaningful as it would be Yangzijiang Shipbuilding’s first dual-fuel 24,000 TEU containerships. 

image.png
Source: CMA CGM

 

#3 – Orderbook surges to record high

With the new contracts secured, Yangzijiang’s orderbook would surge to US$14.6 billion. 

This would be significantly higher than its orderbook of US$10.5 billion in December 2022, and its orderbook of just US$3.1 billion as recent as in December 2020.

These 180 vessels in its orderbook would be progressively delivered over the next few years, providing visibility on the company’s revenue. 

 

What would Beansprout do?

Yangzijiang Shipbuilding share price 26 June 2023
Source: Google

 

Yangzijiang has been gaining significant order momentum in recent months. Just today, it announced an order for three combination carriers from Norwegian ship owner Klaveness, which led to a 5.5% bounce in its share price. 

The recent orders demonstrate the company’s ability to gain market share and win contracts even with concerns about a slowing economy. 

The contracts secured for LNG and methanol dual-fuel vessels from established customers in the shipping industry also reflect the Yangzijiang’s growing traction in clean energy vessels. 

Analysts are generally positive on the prospects of Yangzijiang Shipbuilding, with the consensus target price for Yangzijiang Shipbuilding is S$1.57 as of 26 June 2023. This is 18% higher than its current share price of S$1.34. 

image.png
Source: SGX

 

With the new orders year-to-date of US$5.6 billion exceeding the company’s 2023 new order target of US$3.0 billion, we would await to see if the company would raise its new order guidance at its upcoming results.

Yangzijiang Shipbuilding is a constituent of the STI. Within the STI, Singapore banks have fallen in recent months despite reporting record profit levels. We analyse if it's time to buy Singapore banks.

Apart from Yangzijiang Shipbuilding, another stock in the STI which has seen significant share price movement recently is Sembcorp Industries. Find out why Sembcorp Industries' share price fell sharply last week.

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