Yangzijiang Shipbuilding - CGS-CIMB Research 2022-09-16: GTT Is A Big Deal; LNG Orders Incoming?

Yangzijiang Shipbuilding - GTT Is A Big Deal; LNG Orders Incoming?

  • Tradewinds reported that Celsius Tankers is negotiating with Yangzijiang Shipbuilding (SGX:BS6) and China Merchants Industry for 10-12 large LNG carriers worth ~US$2.8bn. We understand that Yangzijiang’s yards are full till 2024, with about 15 containerships slots left for deliveries in 2025. Assuming the orders are equally split between China Merchant and Yangzijiang, this could add US$1bn-US$1.4bn of orders for Yangzijiang.
  • In our previous report, Yangzijiang Shipbuilding - CGS-CIMB Research 2022-09-08: Order Potential, we noted that Yangzijiang could potentially secure 16 new bulk carrier/containership orders worth US$2.29bn, though the timeline and contracts have yet to be announced by YZJ.
  • All in, Yangzijiang could be actively bidding for up to US$3.7bn of new orders in the pipeline. Its orderbook stood at US$8.13bn as of 1H22.
  • To recap, Yangzijiang obtained a licence from France-based Gaztransport & Technigaz (GTT) on 8 Sep 22, which enables it to construct LNG vessels using GTT Mark III membrane technologies. See Yangzijiang's announcements. We understand that the GTT license allows Yangzijiang to build large LNG carriers of >100,000 CBM. Smaller LNG carriers of <100,000 CBM do not have this GTT requirement and are typically built with independent tanks that are either semi-refrigerated or insulated.
  • According to Clarksons, 120 of LNG carriers newbuild contracts have been awarded in 2022 year-to-date, vs a total of 78 vessels in 2021. Prices for 174k CBM LNG carriers have inched up by ~6% y-o-y to ~ US$214m/vessel. Korean shipbuilders command the largest market share of LNG and LPG carriers (67%), followed by Chinese shipbuilders (22%; of which Jiangnan Shipyard Group and Hudong Zhonghua have 8% each). The delivery slots for the latest Sep 22 orders by Daewoo DSME and Samsung HI are scheduled for 2025/2026. We believe Yangzijiang’s availability in 2025 could be a plus.
  • Yangzijiang's share price is trading at 0.99x CY23F P/BV versus Koreans at 1.39x. We think securing of LNG orders could narrow Yangzijiang’s discount to Korean peers. Our target price for Yangzijiang is on 10x CY23F P/E (2-year average).

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

LIM Siew Khee CGS-CIMB Research | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-09-16
SGX Stock Analyst Report ADD MAINTAIN ADD 1.630 SAME 1.630

Previous report by CGS-CIMB:
2022-09-08 Yangzijiang Shipbuilding - Order Potential

Target prices by 3 other brokers at Yangzijiang Target Prices.
Listing of broker reports at Yangzijiang Analyst Report.

Relevant links:
Yangzijiang Share Price History,
Yangzijiang Announcements,
Yangzijiang Dividends & Corp Actions,
Yangzijiang News Articles


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