SINGAPORE (Aug 7): Yangzijiang Shipbuilding (YZJ) announced earnings of RMB 994.9 million ($198.7 million) for the 2Q ended June, up 38% from RMB 719.9 million a year ago on higher revenue.
This brings the group’s earnings for 1H18 to RMB1.6 billion, 15% higher compared to RMB 1.4 billion in 1H17.
Revenue for 2Q18 more than doubled to RMB 8 billion from RMB 3.8 million previously on higher contributions from the shipbuilding business, which resulted from an increased number of vessels delivered, higher shipbuilding activities as well as the progressive construction and delivery of larger-sixed vessels this quarter.
Notably, 20 vessels were delivered in the latest quarter compared to just four vessels delivered in 2Q17.
Revenue generated by other shipbuilding-related businesses, such as shipping logistics & chartering and ship design services, was also higher in the latest quarter compared to 2Q17 due to contributions from YZJ’s newly acquired 60%-owned subsidiary, Jiangsu Huayuan Logistics.
Further, the group recorded higher interest income and investment income than in the same quarter a year ago at RMB 386 million and RMB 7.4 million, respectively.
Other gains of RMB 212 million was also booked in the latest quarter compared to a gain of RMB 189 million a year ago, mainly due to higher foreign exchange (forex) gains and a fair value gain on financial assets.
Overall, gross profit margin grew marginally to 21% from 20% due to the construction and delivery of larger-sixed vessels with higher profit margins compared to the previous year.
As at end June, cash and cash equivalents grew to RMB 7.9 billion from RMB 5.6 billion previously.
YZJ says it expects the new orders it secured for 22 vessels in the year to date (YTD) to keep its yard facilities at a healthy utilisation rate up to 2020, and provide a stable revenue stream for at least the next two and a half years.
“To achieve sustainable growth, we will continue to upgrade our product portfolio, especially through improving the technological content and efficiencies of large-size containerships and dry bulkers,” comments Ren Yuanlin, executive chairman of YZJ.
“While the market could dictate the share price to diverge from a company’s true value in the short term, the price should eventually reflect the value in the long run,” he adds.
Ren is referring to YZJ’s share price decline of 38% YTD, which comes despite the group’s strong operational and financial performance in the latest quarter.
Since 30 May this year, the group has conducted share buybacks on the open market for up to 0.58% of its issued shares at an average price of 90.45 cents.
YZJ has a share buyback mandate that allows it to buy back up to 10% of the issued share capital.
Shares in the group closed 3 cents higher at 91 cents on Tuesday.
