Broker: Maybank Research Pte Ltd
Date of Report: March 27, 2026
Excerpt from Maybank Research Pte Ltd report.
Report Summary
- Maybank initiates Yangzijiang Shipbuilding (YZJ) with a HOLD rating and a target price of SGD 4.15, citing that both the shipbuilding order cycle and gross margins have likely passed their peak.
- YZJ’s robust USD22.4b orderbook underpins medium-term revenue visibility and supports a moderate earnings CAGR of 5% from FY25 to FY28, but future order momentum and pricing are expected to weaken due to overcapacity, competition, and softer demand.
- Gross margins are elevated at 34% (FY25) but are expected to normalize toward 15–20% as industry pricing softens and competition intensifies, particularly from Hengli and smaller reactivated Chinese yards.
- Potential downside risks include faster margin normalization, weaker demand, FX headwinds (USD:CNY expected to strengthen CNY), and a possible Suez reopening that could release fleet capacity and worsen overcapacity.
- Upside risks include high-priced backlog execution, lower steel prices, and order reallocation from weaker yards, which could sustain margins in the near term.
- Dividend yield is attractive at 5–6% after a payout hike, but further upside is limited due to capital needs for investments (e.g., stake in Seaspan) and capex.
- YZJ remains China’s largest private shipbuilder, with a focus on eco-friendly vessels, operational efficiency, and a strong balance sheet, but faces structural headwinds as the industry cycle matures.
- Maybank prefers Seatrium and Marco Polo Marine for higher upside due to their offshore exposure and charter-rate potential.
- Valuation is undemanding relative to history, but competition and macro risks warrant caution; HOLD is recommended as long-term upside is capped by industry headwinds.
Above is an excerpt from a report by Maybank Research Pte Ltd. Clients of Maybank Research Pte Ltd can be the first to access the full report from the Maybank Research website: https://www.maybank-keresearch.com
