"The heightened economic and geopolitical uncertainties and weaker market conditions in some shipping sectors have been the main cause," says Loh.
The drop in new orders led to a "slight" decrease in prices for new orders, with the slowdown especially pronounced for car carriers, LNG carriers, and tankers.
Yet, demand for alternative fuel-capable vessels remains "ever present", with 55% of the orders for such units.
According to Loh, it is a "mixed bag" for another key market: offshore rigs.
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Day rates for so-called leading-edge rigs in Asia saw "stability" in the most recent 2Q period, but across the broader rig market, there is a "general softening" for high-specification jack-up rigs deployed in southeast Asia and the Gulf of Mexico in 3Q.
Loh says that on a y-o-y basis, rig day rates for jack-ups and drillships have risen 6-25%, though utilisation rates appear to have plateaued in recent months.
On the negative side, semi-subs continue to languish with utilisation rates up marginally while day rates have softened, down 1.1% y-o-y.
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"Thus, it would appear that order flows for new rigs may still be more than 12 months away," he suggests.
Loh is positive on Yangzijiang Shipbuilding. His "buy" call is accompanied by a PE-based target price of $3.29, which is based on a target PE multiple of 9.0x, 2 sd above the company’s five-year average.
"We believe that this premium is justified given its earnings visibility that extends into 2028 as well as its strong track record of safe and efficient shipbuilding for its international customer base," he reasons.
He believes that this counter, trading at FY2025 P/B of 1.3x and generating an ROE of 25%, remains inexpensive relative to its regional peers. In contrast, the Korean yards are trading at higher P/B levels albeit with much lower ROEs of 14.4-18.0%.
Loh has also kept his "buy" call and $2.96 target price for Seatrium, based on 1.5x book value and 1.5 sd above its five-year average.
He describes Seatrium as having demonstrated strong operational momentum in 1Q25 with the delivery of ExxonMobil’s FPSO, consistent repair projects, and robust execution of its $21.3 billion orderbook.
"We expect a strong 2Q25 report with profit margins to be closely watched by the market," he says.
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By winning a floating storage regasification unit contract recently, Seatrium has further enhanced its multi-year revenue visibility and strategic growth. A potential conclusion of the MAS/CAD investigation in the near term should be a relief to the market, says Loh.
Keppel is a "buy" for Loh as well. In the near to medium term, earnings from the company's infrastructure segment will be underpinned by the fact that 66% of its contracted generation capacity in Singapore is locked in for three years or more.
For its 1QFY2025, Keppel reported a 25% y-o-y increase in its earnings, driven by stable infrastructure earnings, stronger asset management, and improved real estate performance.
"We should expect more of the same for 2Q25 in our view," he says.
Keppel is now trading at 15.9x FY2025 earnings and PB of 1.4x, which Loh says is "far from being egregious", especially considering the company's more stable earnings stream given the divestment of its offshore marine business.
His target price for Keppel remains at $9.25.
Both Keppel and Seatrium will report their first-half numbers on July 31.
