Yangzijiang Shipbuilding loses $3b in market value this week after shares sink for 4th day

SINGAPORE – Shares of mainboard-listed Yangzijiang Shipbuilding plunged for a fourth straight day as a US proposal to impose fees on Chinese-built vessels entering American ports continued to batter the stock.

It closed down 9 per cent, or 24 cents, to $2.44 on Feb 27. The counter was the most actively traded by volume and value, with nearly 147 million shares changing hands.

The sell-off has wiped about $3 billion off the Chinese shipbuilder’s market value, with its shares falling 24 per cent in four days.

Its Singapore-listed investment subsidiary – Yangzijiang Financial – also fell, dropping 2.6 per cent to 56.5 cents.

The sell-off comes after the US Trade Representative (USTR) on Feb 21 proposed a fee of up to US$1.5 million (S$2 million) on Chinese-built vessels entering US ports to counter what the US sees as China’s growing dominance in the global shipbuilding, maritime and logistics sectors.

Other proposals include mandating that a portion of US exports be shipped on US-flagged vessels, or American-built ships.  

DBS Bank said in a note on Feb 27 that the sell-off was exaggerated.

“USTR proposes to impose port fees for Chinese-built vessels that enter US ports for every port call on Feb 21, sending Yangzijiang’s share prices into a downward spiral – subsequent broker downgrades exacerbated the sell-off,” it said.

DBS said the “knee-jerk reactions” were overblown as the proposal is pending review on March 24 and the materiality of the new policy is yet to be determined.

It also noted that Chinese shipyards account for nearly half of global shipbuilding capacity, and bypassing them entirely might not be plausible.

“We opine that the news brings about uncertainty and impacts new ordering sentiment... Based on current hefty ship order backlog, any new order placed now will be delivered from 2028 onwards, which is nearing the end of (Donald) Trump’s presidency,” DBS said.

Yangzijiang Shipbuilding is one of the largest non-state-owned shipbuilding companies in China. 

It runs four shipyards in Jiangsu province, producing a range of vessels, including oil tankers, bulk carriers and liquefied natural gas carriers.

The company has an order book valued at around US$22 billion, according to a bourse filing in November 2024.

A Straits Times Index component and blue-chip stock, the company was among the top picks by institutional investors on the Singapore Exchange in 2024.

On Feb 26, Yangzijiang Shipbuilding reported a 50.5 per cent year-on-year jump in net profit to 3.6 billion yuan (S$665.2 million) for the second half ended Dec 31, 2024.

For the full year, it reported a net profit of 6.6 billion yuan, up 61.7 per cent from 4.1 billion yuan a year prior.