China's Yangzijiang Shipbuilding Shares Rise on Profit Beat, Raised Guidance
By Kimberley Kao
Shares of Yangzijiang Shipbuilding rose Wednesday after the company reported higher profit and sales and raised guidance for new order wins in 2024.
Shares rose 3.0% to 1.72 Singapore dollars (US$1.28), lifting year-to-date gains to 15%.
The Jiangsu, China-based shipbuilder said late Tuesday that net profit in the second half ended Dec. 31 rose 65% from a year earlier to 2.36 billion yuan (US$327.9 million), with gross profit and margins helped by lower costs for raw materials, particularly steel, and a favorable foreign exchange rate.
Revenue rose 17% to CNY12.79 billion, which it attributed to the core shipbuilding segment amid heightened progressive construction of larger vessels with improved pricing.
Deliveries fell to 25 ships in the second half from 32 in the same period a year ago, but Yangzijiang said it expects demand to remain high, thanks in part to a climate-related regulatory push globally, with stricter policies likely to drive vessel replacements of those currently noncompliant. In 2023, Yangzijiang Shipbuilding secured 97 new orders worth US$7.1 billion, with over half for alternative-fuel vessels.
Yangzijiang raised its 2024 order-win target to US$4.5 billion, up from prior guidance of US$3.0 billion, adding that a "robust orderbook value gives the group a steady earnings visibility up until 2027."
DBS analysts said in a research note that the company's profit beat expectations amid strong shipbuilding margin expansion, adding that business momentum is likely to continue in 2024, with year-to-date new orders already at US$1.35 billion.
"YZJ is the prime beneficiary of [a] multi-year uptrend of shipbuilding cycle, driven by clean-fueled fleet rejuvenation," the DBS analysts said. "We expect further productivity increase (and possibly capacity expansion) and margin expansion to drive earnings growth in the next 2-3 years."
DBS reiterated a buy rating on the stock and said it will review its current target price of S$1.90.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
February 28, 2024 01:19 ET (06:19 GMT)
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