Excerpt from CGS International report.

Report Summary

• Yangzijiang Shipbuilding (YZJSB) faces increased competition from second-tier Chinese yards with expanded capacity and lower pricing, leading to slower order wins and a lowered order forecast for 2025F to US\$3bn.
• The company’s gross margins are expected to remain robust at 35% in FY25-26F due to low steel costs and efficient cost management, despite a decline in average selling prices for containerships.
• YZJSB maintains a strong order book of US\$22.8bn and is selective in bidding; management is confident in margins with most steel and equipment costs locked in.
• The target price is raised to S\$4.51 (10x CY27F P/E), reflecting undemanding valuations (trading at a 50% discount to peers), with order wins as key catalysts and risks including order cancellations or steel price hikes.
• No major order cancellations were reported except for four oil tankers; YZJSB may charter or sell these upon completion.
• Delays in US and IMO regulatory changes provide reprieve to Chinese shipbuilders and allow more flexibility for shipowners to focus on LNG-fuelled vessels.
• YZJSB is actively pursuing ESG improvements, with 74% of its order book comprising green vessels, and has resolved major arbitration cases with minimal impact on valuation.
• Financially, YZJSB projects steady revenue growth, high ROE, and growing net profit, with dividends expected to increase and maintain strong net cash positions.
• Compared to Chinese, Korean, Japanese, and Singaporean peers, YZJSB trades at significantly lower P/E multiples despite strong fundamentals and order book.

Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com