Shares in Yangzijiang Shipbuilding rallied on Friday in the wake of the company’s announcement that it had moved a step closer to building lucrative LNG carriers.
The Singapore-listed company was the top-traded counter by volume with more than 22.2m shares changing hands, according to Singapore Exchange data.
Investors were reacting to news that the company had obtained a license agreement with GTT enabling it to build vessels using the French membrane containment system designer’s technologies.
Yangzijiang said it received the GTT license after successfully completing a qualification process that commenced in March 2022 and was completed in “record time”, despite delays due to Covid restrictions in China.
The qualification process included the construction of a membrane module and an audit by GTT and the ships’ classification societies, it added.
Following the rapidly expanding global LNG trade, GTT containment-type vessels have reached the highest orderbook-to-fleet ratio of 40% across all vessel types as of July 2022, according to Clarksons.
“The awarded license will enable us to make strategic inroads into the large LNG carrier market, which we previously have not been able to penetrate,” said Yangzijiang chief executive Ren Letian.
“With the shipbuilding industry making the green transition, our plan to contribute tackling climate change is unfolding in stages, as we pave the path to be an enabler in the transition to a net-zero future.
“This is a landmark achievement, and we are proud to be the first private shipyard in China to obtain the license.”
Ren said the focus now was to build on the shipyard’s track record in the LNG space and be on track to meet the growing demand for green vessels.
“We have made steady progress with our recent orders from Pacific International Lines for four units of 8,000-teu LNG dual-fuel container ships, which will be fitted with the GTT Mark III technology,” he said.
“We have certainly developed a strong reputation for delivering good quality vessels in a timely manner and we have every intention of doing the same in the LNG space.”
Local investment banks were largely positive on the announcement, with one stating that the GTT licence was “a step forward in Yangzijiang’s ESG pursuit for greener vessels”.
DBS Bank analyst Ho Pei Hwa said the GTT accreditation was a “testament to Yangzijiang’s technical capability to build large LNG carriers” and a “big leap in its clean vessel transformation”.
She was also upbeat on the prospects of more newbuildings for Yanzijiang as the shipping markets rebound from the second half of the year.
“Moving into 2023, while rates for container ships might moderate, the outlook for bulkers, tankers and LNG carriers remains robust, despite the economic slowdown, as supply remains tight. This will continue to drive newbuilding demand for shipyards,” she said.
Ho added that the “market seems to have overlooked Yangzijiang’s earnings growth potential, the structural uptrend of shipbuilding demand, and the segment’s transformation into a clean vessel space”.