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While the customer for the new contracts was not disclosed, Lim notes that based on Clarksons Research, Yangzijiang’s customer Seaspan had recently placed similar containership orders worth US$900m with an unnamed shipyard.
She also notes that Yangzijiang is gunning for sizeable contracts to reap economies of scale and preserve margins.
“To date, we estimate Yangzijiang having a few sets of 10 series feeder Panamax containerships (1.8k TEU, 4.6k TEU) and Panamax bulk carriers (82k dwt) to see some margin expansion ahead,” she says.
SEE: Yangzijiang Shipbuilding incorporates new subsidiary for RMB10 mil
From an industry standpoint, Lim says the near-term outlook remains positive, with the containership trade still experiencing support from widespread port congestion, robust demand conditions, and high containership freight rates.
She recommends the stock for its earnings visibility, strong net cash of RMB2 billion as of end-2020, as well as its track record in shipbuilding. Her unchanged target price of $1.54 remains based on its 5-year average P/BV of 0.8 times.
As at 4.15pm, shares in Yangzijiang were up 3 cents or 2.8% higher at $1.11.
