A recovery in demand for new bulk carriers has helped Singapore’s worst-performing stock last year become its best this year.
Yangzijiang Shipbuilding Holdings Ltd (揚子江船業), which specializes in dry-bulk carriers, has rallied 83 percent this year to lead the benchmark Straits Times Index.
The Chinese shipbuilding firm has made a comeback after it won 13 contracts worth SU$318 million in the first quarter, about 40 percent of its US$823 million worth of orders it won last year.
Its share price gain this year is more than five times that of the Straits Times Index, which is heading toward its best showing in five years with a 15 percent advance.
The bulk-shipping industry is in the midst of a recovery and scrapping of older vessels are creating demand for new ones, underpinning Yangzijiang.
Earnings are still expected to be under pressure for the next few years as the rebound in orders has been limited amid an oversupply of vessels since the financial crisis.
Yangzijiang’s profit growth is expected to slow for a third consecutive year this year, according to estimates from eight analysts.
The shipping industry has been in a downturn since the financial crisis, as weak global trade led to multiple bankruptcies and order cancelations globally.
Investors may be willing to look past near-term earnings weakness if Yangzijiang can win more contracts, particularly since the sector’s performance tends to be driven by the outlook on the shipping industry, said Corrine Png (方華婷), chief executive officer of Crucial Perspective, a research firm focused on Asian transport equities.
The company, which is expected to report second-quarter results today, declined to comment, citing a blackout period ahead of the earnings release.
Bigger rivals, such as Sembcorp Marine Ltd and Keppel Corp, which focus on oil rigs, have seen their earnings weighed down as crude plunged more than 50 percent since the middle of 2014, and an oversupply in the market.
Shares of Sembcorp Marine and Keppel have risen 19 percent and 11 percent respectively this year, but remain well below historical highs.
Yangzijiang’s advance this year has reversed a 26 percent decline last year, though the stock remains below a 2015 peak.
“Yangzijiang’s main product is dry bulk carriers, Sembcorp Marine and Keppel Corp are mainly rigs, which is still facing probably quite a huge overhang from oversupply,” said Joel Ng, an analyst at KGI Securities in Singapore. “There’s an oversupply in shipping too, but the good thing is that the trend is pointing towards a rebalancing in terms of supply and demand for dry-bulk carriers.”
The company’s new order flow for this year looks to be on track for US$1.2 billion, according to a report by HSBC Global Research.
It reported US$823 million last year, according to a company statement.
“Yangzijiang has been the surprise so far this year, winning orders in the bulk carrier and containership segments,” analysts at HSBC Global Research wrote in the report last week, raising the stock to buy and increasing earnings estimates by 18 percent to 24 percent for the next three years.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
RSS