Yangzijiang Shipbuilding: A Leader in the Industry

Yangzijiang Shipbuilding (YZJSB) has cemented its position as a leader in the offshore and marine sector, with impressive performance metrics and a promising outlook. The company achieved 100% of its FY24 delivery target by delivering 64 vessels, surpassing its goal of 63 vessels and the 57 vessels delivered in 2023. High-margin containerships accounted for 58% of its deliveries, while bulk carriers made up 38%.

The company is well-positioned to benefit from a weaker Renminbi (Rmb) and declining steel prices. With the Rmb depreciating by 4% against the US dollar since October 2024, YZJSB’s 80% unhedged exposure to the Rmb is expected to boost revenue and gross margins. Steel prices, which constitute 25%-30% of the costs for containerships and bulk carriers, fell by an average of 9% in 2024 compared to 2023.

YZJSB’s order book remains robust, supported by the ongoing containership ordering upcycle. The company secured approximately 70 new containership orders in FY24 and expanded its capabilities by winning its first contracts for Very Large Ethane and Ammonia Carriers (VLECs, VLACs). Management has set an ambitious FY25 order win target exceeding US\$4.5 billion, bolstered by its new yard at Xinqiao Park, which is expected to be operational by 2026.

The broker has reiterated its “Add” recommendation for YZJSB with a higher target price of S\$3.62, based on 12x CY26 P/E, reflecting the company’s superior return on equity (ROE) of 27% compared to Chinese peers’ 4%. YZJSB’s inclusion in the MSCI Singapore Index from November 2024 is also expected to attract new investors.

Keppel Ltd: A Resilient Performer

Keppel Ltd has been given an “Add” recommendation with a target price of S\$8.78. The company’s market capitalization stands at US\$9,218 million. Its price-to-earnings (P/E) ratio for CY24, CY25, and CY26 is projected at 15.0x, 13.8x, and 13.6x, respectively. Keppel’s recurring ROE for CY24 is expected to reach 1.13%, with a dividend yield of 4.9%.

The company continues to showcase its resilience with stable earnings, making it a reliable investment option.

Capitaland Investment: Poised for Growth

Capitaland Investment is recommended with an “Add” rating and a target price of S\$4.30. Its market capitalization is US\$9,455 million. The projected P/E ratios are 18.4x for CY24, 13.7x for CY25, and 13.1x for CY26, with a staggering two-year EPS CAGR of 77.9%. Its recurring ROE for CY24 is estimated at 0.92%, alongside a dividend yield of 4.7%.

This strong growth trajectory highlights Capitaland Investment’s potential as a lucrative investment opportunity.

Seatrium Ltd: A Strategic Bet

Seatrium Ltd is rated “Add,” with a target price of S\$2.69 and a market capitalization of US\$5,603 million. The company’s CY24 P/E ratio is projected at 33.8x, dropping to 23.6x in CY25, and further to 13.4x in CY26. Its recurring ROE for CY24 stands at 1.17%, with a dividend yield of 0%.

Seatrium’s ability to scale down its P/E ratio signifies its growing efficiency and profitability over the years.

China CSSC Holdings: A Robust Player

China CSSC Holdings is not rated but boasts a market capitalization of US\$20,392 million. Its P/E ratios for CY24, CY25, and CY26 are 35.7x, 18.8x, and 13.9x, respectively, with a projected EPS CAGR of 63.9%. The company’s recurring ROE for CY24 is an impressive 2.88%, with a dividend yield of 0.9%.

As a key player in the Chinese shipbuilding industry, CSSC’s strong financials underline its market dominance.

Korean Shipbuilders: Leaders in Innovation

The Korean shipbuilding sector includes Korea Shipbuilding & Offshore, HD Hyundai Mipo, and Samsung Heavy Industries, among others. Korea Shipbuilding & Offshore is rated “Add” with a target price of 232,000 KRW. Its market cap is US\$11,224 million, with P/E ratios of 22.9x, 10.2x, and 6.7x for CY24, CY25, and CY26.

HD Hyundai Mipo also has an “Add” rating with a target price of 156,000 KRW. Samsung Heavy Industries shares similar prospects, with robust growth expected in the coming years. The Korean shipbuilding industry showcases strong innovation, particularly in eco-friendly and dual-fuel vessels.

Mitsui E&S: A Balanced Performer

Mitsui E&S Co Ltd, based in Japan, has a market capitalization of US\$1,103 million. While its P/E ratios suggest a moderate performance (6.6x for CY24, 9.1x for CY25, and 12.5x for CY26), its ROE of 21.9% in CY24 reflects its operational efficiency. The company remains a stable player in the Japanese shipbuilding industry.

Brookfield Corp: A High-Growth Asset

Brookfield Corp, with a market capitalization of US\$94,766 million, is not rated but has a P/E ratio of 14.9x for CY24. Its two-year EPS CAGR is a remarkable 151.9%, highlighting its high-growth potential. The company is a strong asset for investors seeking long-term returns.

Other Industrial and Conglomerate Players

SATS Ltd, Sembcorp Industries, and ST Engineering are among the industrial and conglomerate players highlighted. SATS Ltd is rated “Add” with a target price of S\$4.40, while Sembcorp Industries has a target price of S\$7.32. ST Engineering is another “Add” recommendation with a target price of S\$5.30, reflecting its strong market position.

These companies showcase diversity in their business models and remain solid investment options.