Yangzijiang Shipbuilding (Holdings)

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Rainbow 
29 Apr 2020 1Q2020 Result for Yangzijiang Shipbuilding (Holdings)
https://links.sgx.com/FileOpen/Announcem...eID=608796
(click for sgx announcement)

Revenue, profits etc about half.
What's interesting is their pipeline is strong and they even hire temporary workers to catch up on delivery.

Extracted from Page 13:
"As the COVID-19 pandemic spreads around the world and has impacted commercial and manufacturing activities in many economies, it is widely expected that the global economy could enter the worst recession since the 1930s. Global shipping has seen decreased demand so far in 2020, and the situation is unlikely to improve significantly in the second half of 2020. This has caused significant disruption to the rebalancing of the shipping demand and supply (new ships) that had been taking place in the past few years. According to Clarksons Research, the global fleet is expected to grow by 2.7%, while seaborne trade tonnage could decline by 5.1% in 2020. The weak sentiment globally and lack of visibility also make it very challenging for shipowners to plan their new order placement. In 1Q2020, the Group secured new orders for 7 vessels with a total contract value of USD 360 million. These new orders include 3 units of 82,000DWT bulk carriers, 2 units of 40,000DWT bulk carriers and 2 units of 14,000TEU containerships.

There was a termination of one shipbuilding order for one (1) unit of 157,000DWT oil tanker in 1Q2020, for which Group had received a total of USD12 million from the original buyer, and this 157,000DWT oil tanker had been resold to a new buyer earlier this month. After taking into account of the abovementioned termination, as at 31 March 2020, the Group had an outstanding order book of USD 2.9 billion for 69 vessels. These orders will keep the Group’s yard facilities at a healthy utilization rate up to 2021 and provide a stable revenue stream for at least the next 1.5 years.

The Group’s operations have become increasingly efficient over the past few years, represented by the steady increase in vessel deliveries, and it has become more resilient and ready in dealing with unforeseen situations like the COVID-19 pandemic. After a short disruption due to an extended lockdown period as required by the Chinese government after the Chinese New Year, the Group has taken proactive measures to resume production. By the end of March, almost 100% of the workers have resumed working. The company has also activated longer shifts and hired additional workers wherever needed since March to make up for the lost time. Construction of vessels is in good progress and the delivery schedule is within control. The Group has also utilised cloud-based technologies to facilitate the exchange of paperwork for vessel deliveries, thereby solving the problem of travel restrictions.

Since YAMIC started operation in August 2019, it has made steady progress in the construction and delivery of vessels. As it continues to ramp up the production and play out the synergies on cost and technology, YAMIC is expected to play an increasingly instrumental role in leading the Group’s effort in achieving sustainable growth, while building itself into the best shipyard in the world for mid-sized clean energy vessels, LNG carriers and dry bulkers.

With so many uncertainties to both the COVID-19 situation and global economy, the Group will remain vigilant and work closely with its customers to weather this challenging time together, to minimise any potential negative impact on its financial performance as much as possible."

Stay home and stay healthy, everyone.
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Rainbow 
28 May 2020 RMB392m contract for 4x1,000TEU container feeders from China SOE.

https://links.sgx.com/FileOpen/YZJ%20Pre...eID=612743

Stay home and stay safe, valuebuddies.
MotleyFool on deep value 
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Rainbow 
YZJ 1H20 Result
Rev RMB4.7b (vs 7.0b)
GP  RMB1.2b (vs 1.1b)
NP  RMB0.7b (vs 0.9b)
The Group’s recent order wins included several orders from Chinese shipowners. There have also been increased interest in orders for dual-fuel vessels and LNG-related vessels. The Group is optimistic about its new order outlook for the second half of 2020, considering its reputation among customers, its financial strength, and its long-term strategy to grow LNGrelated capabilities. The Group will remain vigilant and work closely with its customers to weather this challenging time together and minimise any potential negative impact on its financial performance.

https://links.sgx.com/FileOpen/Announcem...eID=626403

Stay home and stay safe, valuebuddies.
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Rainbow 
Question 3:

It is disclosed on page 12 of the unaudited financial statements that, borrowings represented the Group’s secured and unsecured borrowings of RMB5,647 million, higher than RMB4,910 million at the end of last quarter, the movement being net proceeds from borrowings during the period. Please explain the increase in the Group’s borrowings for the financial period ended 30 June 2020.

Company Response:
The increase in the Group’s borrowing is mainly because Jiangsu New Yangzi Shipbuilding Co., Ltd had raised another RMB400 million unsecured bank borrowing, and the Company had also raised a SGD loan(approximately equivalent to RMB882 million), which was partly offset by a repayment of bank borrowings of RMB557 million in 2Q2020. 
https://links.sgx.com/FileOpen/Response%...eID=630178

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Rainbow 
YZJ - 9M2020 Result as at 30 Sep 2020
Rev RMB11b (vs 18b)
GP  RMB 3b (vs  3b)
NP  RMB 1b (vs  2b)
The Group’s new order inflow in a depressed market was attributable to its loyal, extensive customer base, its track record in building innovative, high-quality vessels, and a strong financial position. The Group remains optimistic about its financial performance for FY2020, based on the progress of vessel construction and delivery. As the shipping industry adapts to the emerging demand patterns with an increased focus on the efficiency, reliability and flexibility of vessels, the Group is in an advantageous position to capture the opportunities amid and post the COVID-19 era. The Group will also remain vigilant and work closely with its customers to deal with any potential issues arising from the COVID-19 disruptions.
https://links.sgx.com/FileOpen/Announcem...eID=637969

Stay home and stay safe, everyone.

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Rainbow 
YZJ 
The Board is of the view that the proposed establishment of the joint venture company is in the longterm interest of the Group as it will provide the Group with an initial exposure to a broader range of LNG-related business, set the stage for it to capture the long-term growth potential in this market segment, and enhance shareholders’ value.

The above establishment of the joint venture company will be funded internally and is not expected to have any material impact on the earnings per share or net tangible assets of the Group for the current financial year ending 31 December 2021.
https://links.sgx.com/FileOpen/Announcem...eID=645136

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YZJ announced another US$0.97 billion contract win. Mostly container ships, year to date the Group had secured contracts with an aggregate value of US$4.01 billion.

The mad rush for containers have eased somewhat but prices for container shipping are still elevated. And many ports are jammed up as economies re-open. My best guess is even more contract wins this year as the momentum of economies improving/normalizing continues.

To put things into perspective, they had more contract wins in these 4 months than any time in their operating history. But the share prices have yet to fully appreciate what is going on. Hence you see institutional investors such as T. Rowe Price Swooping in. They do have very highly rated funds run by very competent managers.

On the other hand, retail investors are divesting YZJ and going in big on SIA. Very patriotic but not the best decision, I must say.
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I was wondering why its share price shoot up yesterday. Then end of the day the announcement on contract wins came. Inside trading again?
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When the tide rises, all ships float. This is the case for YZJ now. It is firing on all cylinders.

i) Extremely strong order wins and looks set to continue
ii) Expanding margins
iii) Extremely strong balance sheet, not only in terms of Cash level but the quality of fixed/LT assets as well. Fixed assets very conservatively valued. And debt investments(which at one point was a big worry) still performing.
iv) Any contract wins Or vessel sale(from its fleet of chartered out carriers) will translate to very decent profit.
v) 10 years ago, share price is more or less the same but trading at 2.X book. Now it is <1 X book.

It is interesting how the same business is valued so differently 10 years ago and now. So the investor would probably need a very clear mind how much a company is worth irregardless what the market is valuing it.

Disclaimer: Biased opinion as the toe owns YZJ and would buy more if it dips in the short to mid term.
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10 years ago, the BDI (Baltic Dry Index) was running in the average 2000-3000 rates for the past decade.

Fast forward 10 years, the running averages since the gutting 2015-2016 lows, way exceeded the historical norms in the earlier 3 decades before the boom.

After a few false starts in the last few years since the 2016 bottoming, nobody is ready to whole heartedly believe that the good times are back.

BDI: https://tradingeconomics.com/commodity/baltic
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