Maybank trimmed the Singapore-listed shipyard’s rating from “hold” to “sell” and warned that it does not expect to see a rebound in newbuilding prices or a broad-based recovery in the Chinese shipbuilding segment for some time.
“We agree YZJ would be the best proxy to ride a shipbuilding recovery cycle but we disagree that this is the turn,” it told clients in a market briefing that follows a recent series of awards, including an order for up to a dozen VLOCs backed by George Economou’s Cardiff Marine.
Maybank said it still sees “structural weakness” from unresolved capacity issues in China that need to be “flushed out” and noted the China Association for National Shipbuilding recently indicated that half of the nation’s 1,650 shipyards are at risk of closure in the coming years.
The bank claims YZJ, which is widely touted a leader in the “eco” arena, has added around $2.1bn in newbuilding contracts to its backlog thus far this year and is sitting on approximately $1.36bn worth of unexercised options to build 11 containerships and 17 bulkers.
“We recommend investors ‘sell’ into strength and wait for more convincing recovery data points,” it continued, adding: “This would [include] a flushing out of excess yard capacity, a convincing macro economic growth driving trade and shipping recovery and a substantial rise in shipbuilding prices.”
