• This year marks the 5th year Yangzijiang Shipbuilding, one of the largest non-state-owned shipbuilding companies in China, has officially collaborated with a Japanese company in a shipbuilding venture. Named Jiangsu Yangzi-Mitsui Shipbuilding, the venture integrates Yangzijiang's efficient production capabilities with Mitsui's advanced technology and global sales network. The venture's shipyard in Jiangsu Province focuses on constructing various types of ships, including bulk carriers and tankers.  • Now, Yangzijiang has announced a joint venture with another Japanese group -- the Tsuneishi Group, which has a rich history dating back to its founding in 1903. The group is involved in various sectors, including shipbuilding, shipping, trading, and environmental businesses.  • Yangzijiang will acquire a 34% equity stake in Tsuneishi Group (Zhoushan) Shipbuilding Co., Ltd. which established in 2003 a shipyard near Shanghai equipped with two shipbuilding berths and one building dock.The acquisition incrementally adds to Yangzijiang's orderbook and earnings, as CGS International has noted (see excerpts below) • Yangzijiang (market cap: S$9.9 billion) currently sits on a record orderbook of US$20.2 billion, the amazing outcome of a multi-year success in achieving orders. The leap in order wins in the past 4 years is shown below:  Source: CGS, Company• To deal with the workload, Yangzijiang has made moves to acquire land for expanding its shipyard capacity. Read more in excerpts from CGS's latest report below ... |
CGS analysts: Lim Siew Khee & Meghana Kande
■ YZJSB has acquired 34% of Tsuneishi Group (Zhoushan) Shipbuilding Co., Ltd. (TZS) for Rmb833m on c.1x FY23 P/BV.
■ YZJSB’s relationship with TZS started in 2022 when the latter acquired Mitsui E&S Shipbuilding which holds 44% in YAMIC. ■ We think there is room for collaboration to improve TZS’s gross margins and earnings contribution to YZJSB. Reiterate Add and TP of S$3.20. |
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| Why buy this? |
● YZJSB has acquired 34% of Tsuneishi Group (Zhoushan) Shipbuilding Co., Ltd. (TZS) for Rmb833m. TZS's FY12/23 NAV stood at Rmb2.45bn.
This implies a valuation of 1x FY23 P/BV. Upon completion of the share allotment, TZS will become an associated company of YZJSB.
● We understand from YZJSB management that TZS would like to collaborate with YZJSB to improve its overall supply chain management and margins.
● According to Shipping Intelligence Network, TZS has 50 vessels in its orderbook comprising 46 bulk carriers and 4 containerships. We estimate the orderbook to be about US$2bn based on the market value of vessel prices.
● Major customers for TZS are mainly from Japan and Greece which complements YZJSB’s.
● Based on the orderbook and assuming a revenue run rate p.a. of Rmb5bn and net margin of 10%, we estimate TZS’s net profit p.a. could be Rmb500m and c.Rmb170m attributable to YZJSB.
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Full CGS report here.
