Yangzijiang Shipbuilding may not be finished setting newbuilding order records this year, according to a top industry analyst in Singapore.
China’s largest privately-owned shipbuilder could add another $1bn in orders in 2021, UOB Kay Hian analyst Adrian Loh has predicted.
In the last few days, Yangzijiang has booked orders worth $1.58bn, taking its year-to-date order wins to 100 vessels worth a total of $5.59bn.
Containerships continue to comprise the bulk of these orders, but delivery dates for the larger vessels are being pushed to 2024.
“Given that our previous order win expectation of $5.5bn – and one that we had considered a ‘stretch target’ in the first quarter of 2021 – has already been exceeded, we have upgraded our new order win expectation to $6.5bn for 2021 and $4bn for 2022 up from the previous $3.5bn,” said Loh.
The analyst added that the containership upcycle “appears sustainable” as the number of containerships on order is at a 15-year low at only 302 in 2021 year-to-date versus 2005 when 900 of such ships were on order.
“We were certainly heartened to note that Yangzijiang continues to win orders for containerships which are relatively higher-margin vessels for the company,” said Loh.
“Importantly, the company won an order for LPG vessels, which is a first for the company, and is thus encouraging to see it breaking into a new market segment.”
UOB Kay Hian has upgraded its target price for Yangzijiang shares to SGD 1.90 each ($1.41), which is a 33% upside on its closing share price of SGD 1.43 on Tuesday.
The brokerage added that the recent share price retracement was an “opportunity” to acquire shares as the stock price has fallen from its 2021 high of SGD 1.53 per share.
“However, the stock has done very well this year, up 48% year-to-date, and thus it is understandable that some investors would want to take profits,” said Loh.
“Nevertheless, we believe that the stock continues to have meaningful upside as the stock is inexpensive and there are more order wins to come in our view.”
