Yangzijiang Shipbuilding (Holdings) has reported better earnings for 2HFY2021, in line with higher revenue.
For the six months ended Dec 2021, the company reported earnings of RMB2.06 billion ($440 million), up 54% y-o-y, bringing full-year earnings to RMB3.7 billion, up 47% over FY2020.
Revenue for 2HFY2021 was up by 55% y-o-y to RMB10.17 billion, while FY2021 revenue ended at RMB16.77 billion, up 13% over F2020.
While higher steel cost, as well as unfavourable foreign exchange movements, caused a six-percentage point drop in margins to 14%, the company managed to hedge USD/RMB forward contracts, which allowed it to book a currency gain of RMB627 million.
The company, one of the component stocks of the Straits Times Index, plans to pay a final dividend of five cents per share, versus 4.5 cents paid for this time last year.
As at Dec 31 2021, Yangzijiang has built up an order book of US$8.5 billion for 157 ships, of which orders for 124 vessels worth US$7.4 billion were secured in 2021.
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The company has on Feb 11 obtained “pre-clearance” from the stock exchange to spin off its investment arm from the core shipbuilding business for a separate listing.
Existing Yangzijiang shareholders will receive a dividend-in-specie on a one-to-one basis.
“The shipbuilding arm will see a more efficient capital allocation structure which should lead to higher returns on assets and equity, all else equal,” says Ren Letian, Yangzijiang’s executive chairman and CEO.
“We also hope to detach Yangzijiang Shipbuilding from any conglomerate discount given that both entities will become singularly-focused businesses,” he adds.
The spin-off group will be led by Ren Yuanlin, Letian’s father and former chairman of Yangzijiang, and will have its own board.
According to Yuanlin, who now holds the title of honorary chairman of Yangzijiang Shipbuilding (Holdings), the spin-off group will expand further into fund and wealth management business by acquiring a fund management firm with a capital markets services license in Singapore.
“The spin-off group will no longer be restricted to a limited number of asset classes or type and will see diversification into fast-growing sectors and new asset classes including private debt, mezzanine financing and REITs, and will expand its geographical outreach in the Greater China and Southeast Asia region,” says Yuanlin.
Yangzijiang shares closed on Feb 25 at $1.40, up 2.19% for the day and up 3.7% year to date.
