(13-08-2015, 10:48 AM)CityFarmer Wrote: [ -> ] (13-08-2015, 10:20 AM)greengiraffe Wrote: [ -> ]If your yard is empty and need to cover fixed costs what would u do as a CEO and COO? Is building ships so difficult when you can build a rig? Morever is the global shipping segment in the pink of health?
Just ask a few hard questions and logical ones and perhaps you will be able to see some light...
YZJ IMHO is a survival but that doesn't mean that it is immune to headwinds facing competition...
The discussion started with a clarification that YZJ isn't an pure O&G play, but it has "evolved" into a separate topic now.
How will CEO do, without sufficient jobs? in YZJ case, it shutdown yard(s), and relocated the resource, to remain focus on margin, over sales.
What so difficult to build ship, when you can do rig? I don't know the exact answer, but I have asked a similar question before to industrial expert. Is it difficult to build aluminium vessel, if you can build bigger ship? The answer is, the process is totally different, and infrastructure also different. It needs significant capex to reconfigure and do the switch economically. I reckon the same may apply to rig vs containership/bulk carrier builders
Having said so, YZJ isn't spared by the storm, but should survive better than those peers went deep into rig-building previously.
(It is definitely not a good answer, any expert to advice further)
Part of the script in the Global O&G and Ship Building Industry... stay tuned and Akan Datang...
I have no doubts that KepCorp, Sembcorp, Cosco and YZJ will survive... when to position for a cyclical upturn is another big question...
Very good discussion
GG
Hi all,
To add to the discussion, just want to share my 2 cents on the relative advantages YZJ has over rivals in the industry.
1) Strong balance sheet. This factor has become very important in recent years due to the pullback of banks in the issuance of performance guarantees for shipbuilding contracts. The lack of performance guarantees makes it difficult for shipbuilders to secure favorable payment terms and large upfront deposits.
2) China's fleet replacement programme. The Chinese government has recently extended subsidies to China flagged vessels for the scrapping and replacement of older vessels with new ones with lower emissions. The subsidies are half paid upon scrapping of vessels, with the other half paid upon ordering of newbuilds with Chinese yards. This is favorable to YZJ's strategy of focusing on construction of greener vessels.
(13-08-2015, 01:16 PM)Clement Wrote: [ -> ]Hi all,
To add to the discussion, just want to share my 2 cents on the relative advantages YZJ has over rivals in the industry.
1) Strong balance sheet. This factor has become very important in recent years due to the pullback of banks in the issuance of performance guarantees for shipbuilding contracts. The lack of performance guarantees makes it difficult for shipbuilders to secure favorable payment terms and large upfront deposits.
2) China's fleet replacement programme. The Chinese government has recently extended subsidies to China flagged vessels for the scrapping and replacement of older vessels with new ones with lower emissions. The subsidies are half paid upon scrapping of vessels, with the other half paid upon ordering of newbuilds with Chinese yards. This is favorable to YZJ's strategy of focusing on construction of greener vessels.
The "white list" of China Ministry of Industry and Information Technology, is mean for the financing purpose, and YZJ is in the "white list".
http://www.reuters.com/article/2014/09/0...N920140904
Having said so, I am yet to see an impact in the company order book. May be we should wait till 2017, since it is a 3-years restructuring plan.
(vested)
(13-08-2015, 04:48 PM)CityFarmer Wrote: [ -> ] (13-08-2015, 01:16 PM)Clement Wrote: [ -> ]Hi all,
To add to the discussion, just want to share my 2 cents on the relative advantages YZJ has over rivals in the industry.
1) Strong balance sheet. This factor has become very important in recent years due to the pullback of banks in the issuance of performance guarantees for shipbuilding contracts. The lack of performance guarantees makes it difficult for shipbuilders to secure favorable payment terms and large upfront deposits.
2) China's fleet replacement programme. The Chinese government has recently extended subsidies to China flagged vessels for the scrapping and replacement of older vessels with new ones with lower emissions. The subsidies are half paid upon scrapping of vessels, with the other half paid upon ordering of newbuilds with Chinese yards. This is favorable to YZJ's strategy of focusing on construction of greener vessels.
The "white list" of China Ministry of Industry and Information Technology, is mean for the financing purpose, and YZJ is in the "white list".
http://www.reuters.com/article/2014/09/0...N920140904
Having said so, I am yet to see an impact in the company order book. May be we should wait till 2017, since it is a 3-years restructuring plan.
(vested)
Hi CityFarmer,
The fleet renewal programme i was referring to is the one described below.
http://www.ihsmaritime360.com/article/18...ld-tonnage
It was announced in 2013 and recently extended till 2017. Chinese shipowners probably were in the loop about the scheme's extension and might have deferred their replacement orders for later.
What the wise men does in the beginning, the fool does in the end. On hindsight, the fools (Chinese shipyards) came in late to the party and were unfortunate to hit the downturn (I would argue that in an alternate history where shale gas didnt take off and geopolitical concerns continue to plague Iraq/Iran, they would turn out to be big winners and hailed as the Keppel-Sembcorp giant slayers). Their rig market has turned from 'Will they be able to deliver their orders?' (the worry in 2013) to 'Will their delivery be accepted?' now
I admire Chairmen Ren's candor. Retail investors have a certain arrogance and it is already hard for one to admit their own mistakes. What more for a 400 pound gorilla ([removed by moderator])??
The Koreans' speciality, drillships are mainly used for exploration wells and producers can easily defer them because they don't yield immediate revenue. GG's script of 'Return of the Chaebol Shipbuilders' looks highly possible. The Chinese shipyards have started defensive mode with consolidation. I am predicting that the end game is coming when the chaebol shipbuilders lobbies for a state bailout (low interest loans or loan-for-equity deals).
The tide seems to be going out for YZJ...
Seems like a big crisis for SGX... nothing is safe...
(19-08-2015, 10:27 AM)greengiraffe Wrote: [ -> ]The tide seems to be going out for YZJ...
Seems like a big crisis for SGX... nothing is safe...
In my opinion, it is part of the general outflow of capital from the Asian markets over the past few weeks.
For YZJ itself, the company should benefit from the recent RMB devaluations in terms of tendering competitiveness and shipbuilding margins. The management has also significantly reduced the group's USD liabilities in 2014. Had the devaluation happened a year ago, it would have been disastrous for YZJ. Today the company is positioned to benefit.
(19-08-2015, 12:02 PM)Clement Wrote: [ -> ] (19-08-2015, 10:27 AM)greengiraffe Wrote: [ -> ]The tide seems to be going out for YZJ...
Seems like a big crisis for SGX... nothing is safe...
In my opinion, it is part of the general outflow of capital from the Asian markets over the past few weeks.
For YZJ itself, the company should benefit from the recent RMB devaluations in terms of tendering competitiveness and shipbuilding margins. The management has also significantly reduced the group's USD liabilities in 2014. Had the devaluation happened a year ago, it would have been disastrous for YZJ. Today the company is positioned to benefit.
YZJ US$ debt serves as natural hedge against the US$ asset (receivables). It will not be a disastrous even if the same happens in 2014, or any other period
The Yuan devaluation, is benefiting those China exporters, which includes YZJ.
(19-08-2015, 04:03 PM)CityFarmer Wrote: [ -> ] (19-08-2015, 12:02 PM)Clement Wrote: [ -> ] (19-08-2015, 10:27 AM)greengiraffe Wrote: [ -> ]The tide seems to be going out for YZJ...
Seems like a big crisis for SGX... nothing is safe...
In my opinion, it is part of the general outflow of capital from the Asian markets over the past few weeks.
For YZJ itself, the company should benefit from the recent RMB devaluations in terms of tendering competitiveness and shipbuilding margins. The management has also significantly reduced the group's USD liabilities in 2014. Had the devaluation happened a year ago, it would have been disastrous for YZJ. Today the company is positioned to benefit.
YZJ US$ debt serves as natural hedge against the US$ asset (receivables). It will not be a disastrous even if the same happens in 2014.
The Yuan devaluation, is benefiting those China exporters, which includes YZJ.
Like I say its the poor macro outlook not the just the segment that YZJ is operating in. Overall, global O&G and shipbuilding industry is cyclical. China to me no longer has the competitive advantage in mfging across a broad segment and hence the need to resort to weakening of Chinese Yuan.
In addition, I remain puzzled over why YZJ is doing relatively well compared to other China based yards such as Cosco Pacific - really puzzled over the big picture.
Not Vested
GG
(19-08-2015, 05:21 PM)greengiraffe Wrote: [ -> ]Like I say its the poor macro outlook not the just the segment that YZJ is operating in. Overall, global O&G and shipbuilding industry is cyclical. China to me no longer has the competitive advantage in mfging across a broad segment and hence the need to resort to weakening of Chinese Yuan.
In addition, I remain puzzled over why YZJ is doing relatively well compared to other China based yards such as Cosco Pacific - really puzzled over the big picture.
Not Vested
GG
Pretty sure it's been doing relatively well compared to the rest due to the sale of the HTM financial "assets" supplementing their shipbuilding profits(400+ million under other gains) They also seem to have a lot of orders in the pipeline, many new orders probably from smaller players that are going kaput.
In actual fact, GPM has already dropped very significantly, despite increased shipbuilding revenue. Profits from shipbuilding this year is actually slightly below last years level too.
share price is on downtrend too since recent peak at $1.40 levels...
But in the end, this is still S-chip. dunno what is going on with the HTM assets, think YZJ will take a big hit from that, seems like no buyer for them to sell off liao.