YZJ Shipbuilding Q4 earnings jump 84%, helped by forex gains

SINGAPORE - Yangzijiang (YZJ) Shipbuilding's fourth-quarter net profit rose 84 per cent year-on-year to 1.25 billion Chinese yuan (S$252 million), helped by favourable foreign exchange gains.

A final dividend of five cents per share was proposed, up from 4.5 cents in the same period a year earlier. YZJ Shipbuilding shares fell three cents or 2.06 per cent to close at $1.43 on Thursday before results were announced early Friday.

Gross profit margin improved to 18.2 per cent from 14.9 per cent in the same period a year earlier, due mainly to higher interest income from financial assets held to maturity. Foreign exchange gains, lower administrative expenses and a reversal of impairment loss also lifted the bottom line.

Revenue in the three months ended Dec 31 was 4.9 billion yuan, down 22 per cent on lower revenue from shipbuilding due to progressive construction of less larger containerships and lower trading revenue. Eleven vessels were delivered in the fourth quarter last year, versus six in the fourth quarter of 2017.

For the 2018 full-year, net profit was 3.6 billion yuan, up 23 per cent from 2017.

Full-year revenue was 23.2 billion yuan, up 21 per cent on higher volume of shipbuilding activities, higher trading volume, higher revenue from shipping logistics, chartering and ship design services, as well as additional revenue from Shanghai Huayuan Shipping Co, which was acquired last year and provides domestic shipping services.

The group delivered 46 vessels in 2018, versus 33 in 2017.

Total earnings per share was 91.34 RMB cents in 2018, up from 75.59 RMB cents in 2017.

YZJ's outstanding order book stood at US$3.9 billion for 113 vessels as at end 2018.

"These orders will keep the group's yard facilities at a healthy utilisation rate up to 2021 and provide a stable revenue stream for the group," it said.

YZJ Shipbuilding wrote in its outlook statement: "Despite the uncertainties associated with global economic growth and the trade tensions between US and China, research suggests some improvement in the fundamentals in the shipping and shipbuilding market in 2019. While global demand for container shipping is expected to remain stable and demand for seaborne dry bulk trade to grow at a faster pace in 2019, the fleet growth for both containerships and dry bulkers is expected to slow down in 2019 compared to 2018."

In October last year, YZJ announced a shipbuilding joint venture with two Japanese shipbuilders, Mitsui E&S Shipbuilding and Mitsui & Co.

The joint venture will be based in YZJ's Taicang yard, and take growth prospects to the next level, said executive chairman Ren Yuanlin: "Our combined strengths in shipbuilding, technology and customer network will lay the foundation for a strong entity that caters to clients' demand for high-tech, green vessels especially in the LNG carrier space."

Net asset value per share was 731.91 RMB cents as at end 2018, up from 652.2 RMB cents as at end 2017.