Comprehensive Analysis of Shipbuilding and Marine Companies

Date of Report: December 2, 2024

Broker: CGS International

Yangzijiang Shipbuilding: Riding the Wave of Record Order Wins

Yangzijiang Shipbuilding (YZJ) has made headlines with an impressive new order tally of US\$14.3 billion year-to-date, surpassing expectations of US\$11.3 billion for 2024. The recent announcement of US\$2.63 billion in new contracts for 21 new vessels, including 12 dual-fuel containerships, underscored the company’s robust order book. Deliveries are scheduled between 2027 and 2029, offering a long-term growth trajectory.

Investors are recommended to accumulate shares on price weakness, as YZJ is trading at a 30% discount compared to peers. With a target price of S\$3.20, the company’s superior return on equity of 27% and significant capacity for future orders make it a compelling investment. Key risks include potential steel cost increases and policy actions from the US government.

Keppel Ltd: Steady Growth Amidst Industry Challenges

Keppel Ltd stands out with its target price set at S\$8.78, reflecting strong market confidence. The firm is projected to achieve a steady growth in its earnings per share (EPS) with figures of 14.5, 13.4, and 13.2 for the next three years. Despite a modest 0.9% compound annual growth rate (CAGR), Keppel maintains a robust dividend yield of 5.0% and recurring return on equity (ROE) figures of 1.10 and 1.07 for the next two years.

Capitaland Investment: A High-Growth Prospect

Capitaland Investment is positioned for significant growth, with a target price of S\$4.30. The company is anticipated to deliver a remarkable 77.9% EPS CAGR over the next two years, reflecting its aggressive expansion strategy. Offering a dividend yield of 4.4%, the company remains a strong contender in the asset management sector, with ROE projections of 0.98 and 0.94.

Seatrium Ltd: Navigating Through Challenges

Seatrium Ltd, with a target price of S\$2.69, is navigating through a challenging market with a focus on long-term recovery. The company has an anticipated EPS growth from 29.3 to 11.6 over the next three years, indicating a strategic realignment. Despite these challenges, Seatrium maintains a neutral dividend yield and is positioned for a potential turnaround.

COSCO SHIPPING International: A Strategic Hold

COSCO SHIPPING International remains not rated, with a price of S\$0.14 and a market cap of US\$228 million. The company’s strategic positioning within the shipping industry remains under review, with no specific financial forecasts available at this time.

China CSSC Holdings Ltd: A Powerhouse in Shipbuilding

China CSSC Holdings is a key player in the shipbuilding sector, boasting a substantial market cap of US\$22,286 million. With a robust EPS growth forecast of 64.0% over the next two years, the company is set to capitalize on its strategic market position. Offering a modest dividend yield of 0.8%, CSSC Holdings continues to be a significant force in the industry.

China Shipbuilding Industry Co: Positioned for Growth

China Shipbuilding Industry Co, also not rated, has an impressive market cap of US\$15,331 million. Although specific EPS forecasts are unavailable, the company’s strategic initiatives are expected to drive future growth, aligning with the broader industry trends.

Korea Shipbuilding & Offshore: A Resilient Contender

Korea Shipbuilding & Offshore, with a target price of KRW 232,000, represents a resilient player in the shipbuilding arena. The company exhibits strong growth prospects with an EPS CAGR of 166.4% over the next two years, suggesting robust operational efficiency and market reach.

Samsung Heavy Industries: Poised for Expansion

Samsung Heavy Industries, with a target price of KRW 16,500, continues to navigate market dynamics with a focus on sustainable growth. The company’s EPS is expected to grow significantly over the next three years, underscoring its strategic investments in technology and infrastructure.

Conclusion

The shipbuilding and marine industry is poised for significant developments, as evidenced by the detailed analysis of these key players. Each company presents unique opportunities and challenges, shaped by market conditions and strategic initiatives. Investors are advised to consider these insights when making informed investment decisions in this dynamic sector.