Yangzijiang Shipbuilding shares up as US eases proposed port fees on China-built vessels

Straits Times

21-04-2025

An aerial view of the Port of Oakland on April 18. The US has eased on its initial proposal of imposing port fees and curbs on China-built vessels. PHOTO: AFP
Yangzijiang Shipbuilding shares up as US eases proposed port fees on China-built vessels
SINGAPORE - Shares of mainboard-listed Yangzijiang Shipbuilding surged on April 21, after the United States eased on its initial proposal of imposing port fees and curbs on China-built vessels.
The counter was trading at $2.24, up 8.7 per cent as at 3.30pm on April 21, but remains 32.1 per cent below its 52-week high of $3.30 in February. It closed 19 cents, or 9.2 per cent, higher at $2.25 on April 21.
While the easing of port fees have stabilised Yangzijiang's share price, analysts told The Straits Times that the effects of a global trade slowdown could still dampen its growth.
The company saw its share price sink in February, after the US Trade Representative Office (USTR) laid out proposed fees and other shipping restrictions on Chinese vessels.
These include port entrance fees of up to US$1 million (S$1.31 million) per vessel owned by Chinese maritime transport operators, or a US$1,000 charge per net ton on the vessel's cargo capacity.
But the USTR softened its stance on April 17, deciding not to impose fees based on the percentage of Chinese-built ships in a fleet or future Chinese ship orders. The new fees will be applied once per voyage, up to six times a year.
US exporters and vessel owners using China-built vessels to service the Great Lakes, the Caribbean and US territories will also be exempt from port fees.
Still, Chinese-built and owned ships will incur a fee of US$50 per net ton from Oct 14, with annual increases of US$30 per ton over the next three years.
This fee will apply if it exceeds an alternative calculation method, which charges US$120 per container discharged, rising to US$250 over the same period.
Chinese-built ships owned by non-Chinese firms will face a fee of US$18 per net ton, with annual increases of US$5.
Mr Paul Chew, head of research at Phillip Securities Research, said the latest move by the US authorities cleared the uncertainty around Yangzijang's share price, which had been weighed down by concerns that the potential fees could be more punitive.
'The larger worry now for the container industry will be the collapse in volumes and possibly rates between the US and China routes,' he said.
'Despite the relief rally, we have worries that the container ship ordering cycle for Yangzijiang will be under pressure from the slowdown in global trade.'
Ms Ho Pei Hwa, DBS Bank senior vice-president of equity research, noted that Yangzijiang has a 'wide economic moat' to weather through near-term uncertainties and potential structural shifts.
She said: 'The more manageable port fees and increased flexibility for shipping companies and shipbuilders should help ease concerns about cancellations of Chinese shipbuilding orders and future demand.
'We maintain a 'buy' rating and a target price of $3.80 for Yanzijiang.'
Mr Isaac Lim, chief market strategist at digital trading platform Moomoo, noted that Yangzijiang has been consistently buying back shares since early April, having repurchased about 15 million shares so far.
'Such consistent actions are typically interpreted by the market as a sign that the company expects stronger growth in the future,' he said.
'Its share price could well reach $2.85 over the next two months and even test its historical high at $3.32 by the end of the third quarter of 2025.'
Yangzijiang Shipbuilding is one of the largest non-state-owned shipbuilding companies in China. It runs four shipyards in Jiangsu province, producing a range of vessels including oil tankers, bulk carriers and liquefied natural gas carriers.
In March, the firm acquired a 34 per cent stake in a wholly owned subsidiary of Japanese shipyard Tsuneishi Group for 833.1 million yuan (S$149 million).
The company has an order book valued at around US$22 billion, according to a bourse filing in November 2024.
A Straits Times Index component and considered a blue-chip stock, the company was among the top picks by institutional investors on the Singapore Exchange in 2024.
On Feb 26, Yangzijiang Shipbuilding reported a 50.5 per cent year-on-year jump in net profit to 3.6 billion yuan for the second half of the year ended Dec 31, 2024.
For the full year, it reported a net profit of 6.6 billion yuan, up 61.7 per cent from 4.1 billion yuan a year prior.
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