Yangzijiang Shipbuilding - CGS-CIMB Research 2022-10-26: First Of Likely More LNG Carrier Orders

Yangzijiang Shipbuilding - First Of Likely More LNG Carrier Orders

  • Yangzijiang Shipbuilding (SGX:BS6) clinched its first order for two 175,000 cubic meters (CBM) liquefied natural gas (LNG) carriers. These are Yangzijiang’s first GTT Mark III LNG carrier orders after obtaining the GTT licence on 8 Sep 2022. See Yangzijiang's announcement dated 2022-10-26. This win brings Yangzijiang’s year-to-date order wins to US$4.08bn and orderbook to ~US$10.75bn.
  • These LNG carriers are scheduled for delivery over 2025-2026 for a European customer. We estimate the two LNG carriers were secured at market price of US$240m each.
  • The European energy crisis has resulted in strong demand for LNG and LNG vessels. Some of the LNG vessels are being used as floating storage facilities, causing charter rates to spike. Clarksons Shipping Intelligence Network expects the tight market driven by energy security concerns to persist in 2023 while the implementation of environmental regulations may provide additional market support (e.g. by encouraging slower steam turbine vessel speeds).
  • 3- to 6-month spot charter rates for 174k CBM vessels are at a record US$330k/day and 1-year time charter rates are US$260k/day (+160% vs 2019 level of US$100k/day). Strong profitability among owners could keep demand for 170,000-180,000 CBM LNG carriers steady over the near term, which benefits Yangzijiang.
  • Reiterate ADD rating on Yangzijiang. Our target price for Yangzijiang is based on 10x CY23F P/E (2-year historical average).
  • Yangzijiang's share price currently trades at 8x CY23F P/E and 1.4x CY22F P/BV vs FY21-24F EPS CAGR of 16% and CY23F ROE of 16%.
  • Yangzijiang's 3Q22 operation update could be on 14 Nov. See SGX listed companies' latest earnings calendar.

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 2022-10-26

Read also CGS-CIMB's most recent report:
2022-12-01 Yangzijiang Shipbuilding - More Clarity On Yard Expansion Plans During KL NDR.

Previous report by CGS-CIMB:
2022-11-14 Yangzijiang Shipbuilding - Prudent Approach In Expansion.

Price targets by 2 other brokers at Yangzijiang Target Prices.
Listing of research reports at Yangzijiang Analyst Reports.

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

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