Yangzijiang Gains on Plan for New Shipbuilding Base in China
By Amanda Lee
Yangzijiang Shipbuilding's shares rose after the China-based company said it will consider investing more than US$410 million to construct a clean-energy ship manufacturing base near Shanghai.
The stock was 7.0% higher at 2.46 Singapore dollars (US$1.83) in midday trading Tuesday, nearing a record high reached last month. Year-to-date gains stood at 65%.
The Singapore-listed company said late Monday that it plans to spend about 3 billion yuan (US$413.2 million) over two years to build a new facility near an existing one in Jiangsu province. The plan is subject to regulatory approval and the results of a feasibility study, it said.
Citi Research analyst Luis Hilado said the plan signals confidence in Yangzijiang's long-term prospects, adding that with an estimated net cash position of CNY11 billion by 2025, "funding the project appears highly feasible."
"Albeit an initial profit pressure point, management is likely looking ahead to the long-term project and revenue upside from demand for clean energy ships," he wrote in a research note.
Citi has a buy rating on Yangzijiang with a target price of S$2.45. Hilado said the bank would revisit forecasts once details such as the timing of the feasibility study and the project cost breakdown are made clear.
Yangzijiang has seen strong orders this year. It said in late May that it had already booked 74% of its full-year order-win target of US$4.50 billion and was on schedule to hit its 2024 delivery target of 63 vessels.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
July 16, 2024 00:56 ET (04:56 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
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