Yangzijiang Shipbuilding - DBS Research 2023-02-24: A Decent FY22; Compelling Growth Ahead

• Yangzijiang (SGX:BS6)’s net profit (ex-investment) rose 23% y-o-y to RMB1.44bn in 2H22, in line with expectations. Results could have come in 12% above the consensus estimate if not for the provision of RMB185m made for the jack-up rig. This brings full-year net profit (ex-investment) to RMB2.6bn, representing 33% y-o-y growth.
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• Shipbuilding gross margin improves sequentially to 13.5% (would have been 15.3% ex-jack-up provision) from ~12.8% in 1H22, and 10.8% in 2H21 as Yangzijiang progressively executes the higher value and margin contracts secured in 2021.
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• In addition, the favourable steel cost in 2H22 also bodes well for further margin expansion in 2023, as management has locked in the steel price for production this year. The bulk of these orders has factored in high steel prices of over RMB6,000/t (vs. average steel cost of RMB4,000-4,500/t in 2H22) and the company has hedged its US$ exposure at RMB6.6-6.8.

Secured US$910m in new orders since Nov

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Above is the excerpt from report by DBS Group Research.
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