Yangzijiang Shipbuilding announced in its 3QFY2021 ended September business update that its gross profit for the period came in 20.8% lower at RMB1 billion ($210.9 million) from RMB1.3 billion a year ago.
This came on the back of at 25% y-o-y increase in revenue to RMB4.5 billion from RMB3.6 billion last year, attributable to higher contribution from the group’s core shipbuilding segment, as well as its shipping and Other segment, partially offset by lower contribution from the group’s investment segment.
See: Brokers' Digest 966
The lower gross profit was mainly due to a 14 percentage point y-o-y drop in gross profit margin for the group’s shipbuilding segment as raw material costs increased, which then caused the segment to record a 30% y-o-y drop in gross profit to RMB486.2 million.
On top of the gross profits mentioned above, the group also disposed of one unit of 82,000DWT bulk carrier held under its shipping arm in 3QFY2021, recording a gain of about RMB40 million from disposal of property, plant and equipment.
In 3Q2021, following the repayment of debt investment at amortised costs during the period, there was a net release of impairment provision and the group recorded a net reversal of impairment loss on financial assets of RMB191 million, compared to a provision of impairment loss of RMB183 million in the previous year.
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The group’s debt investment at amortised costs before impairment provision as at end-September stood at RMB12.59 billion.
In 4QFY2021 so far, Yangzijiang further secured shipbuilding orders for two 82,300 DWT and four 45,000 DWT bulk carriers with a total contract value of US$200 million ($270 million). As of announcement date, the group has secured order wins for 124 vessels worth US$7.41 billion in 2021, Yangzijiang’s largest order wins in history and has an outstanding orderbook of US$8.86 billion for 165 vessels.
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Power crunch amidst shortage of coal supplies in China has led to electricity rationing and production halt at numerous factories in the months of September and October, but the impact on the group’s shipyards were kept under control. Since the beginning of November, restrictions and constraints on electricity usage have eased and the shipyards are now back to normal operations. Yangzijiang’s major shipyards are currently operating at full utilisation rates and there are no changes to the Group’s scheduled delivery of vessels in 2HFY2021.
Looking forward, the group continues to consider various possibilities and its respective tax implications, as part of its strategic review of its debt investment portfolio to allow the group to focus on its core shipbuilding business.
Shares in Yangzijiang closed at $1.40 on Nov 1.
Photo: Stock
