Yangzijiang likely in focus after reporting 2017 net profit climbed

Singapore five-dollar note Photo by Leslie Shaffer

Shares of Yangzijiang will likely be in focus after it reported solid earnings growth.

For 2017, net profit rose 67 percent on-year to 2.93 billion yuan on revenue of 19.2 billion yuan, up 27 percent on-year, the shipbuilder reported in an SGX filing after the market close.

That was largely better than forecasts from DBS in November, when it forecast net profit of 2.905 billion yuan on revenue of 16.77 billion yuan. DBS had forecast a dividend of 4.47 Singapore cents a share, fairly in line with the group’s proposed 4.5 cent dividend.

Yangzijiang issued a positive outlook.

”With the Baltic Dry Index recovering to a three-year high, the market conditions for shipbuilding industry have improved in 2017, especially for dry bunkers,” it said in its release.

Promising long-term demand?

The company said it landed new orders for 74 vessels with a total contract value of US$2.1 billion in 2017, more than double 2016’s level. It added that the outstanding order book of US$4.7 billion as of end-2017 will keep its yards’ facilities “highly utilised” up until 2020.

The company’s executive chairman was also upbeat.

”The shipbuilding industry is cyclical, and there are still uncertainties in the length and magnitude of the currency recovery,” Ren Yuanlin, executive chairman said in the statement.

”However, given that seaborne trade will remain a dominant part in international trade, the growth of ecommerce, China’s Belt and Road Initiative, and the International Maritime Organizaiton’s rules and regulations on vessel emission standards, the long-term demand for shipbuilding remains promising,” he said.

The stock ended down 0.66 percent on Wednesday at S$1.510.

On the upside, the stock is likely to see resistance at January’s high around S$1.64. On the downside, initial support is likely at the February 22 low of S$1.44, followed by the February 14 market rout low of S$1.34.