Yangzijiang Shipbuilding, the largest private shipbuilder in China, has registered a total return of +20.3% year-to-date.
Sembcorp Marine, a global leader in marine & offshore engineering solutions, has total returns of +38.0% year-to-date.
Ezion Holdings, the largest offshore services provider listed on SGX, has total returns of -1.3% on a year-to-date basis. The stock, however, has returned +81.0% since its trough in September 2016.
| Name |
SGX Code |
Market Cap S$M |
Total Return YTD % |
Total Return 1 Yr % |
P/E |
P/B |
Current ROE % |
Div Ind Yld % |
| Yangzijiang Shipbuilding |
BS6 |
3545 |
20.2 |
12.9 |
10.5 |
0.8 |
7.9 |
3.9 |
| Sembcorp Marine |
S51 |
3719 |
38.0 |
26.6 |
50.4 |
1.6 |
3.1 |
1.3 |
| Ezion Holdings |
5ME |
767 |
-1.3 |
-17.6 |
N/A |
0.4 |
-1.7 |
N/A |
| Average |
|
|
19.0 |
7.3 |
30.4 |
0.9 |
3.1 |
2.6 |
Source: Bloomberg (2 Mar 2017)
Yangzijiang Shipbuilding
Stock Performance and Valuations
- Yangzijiang Shipbuilding registered a total return of -22.3% in 2016, reaching a year low in September. Since the lows in September, the stock has returned approximately 29.0% and on a year-to-date basis, the stock’s total return is at 20.3%.
- From a valuation perspective, the stock currently trades at 10.5x price-to-earnings (P/E) ratio and 0.8x price-to-book (P/B) ratio, with a forecasted 2017 ROE of 7.8%. Historically on a PB basis, the stock is trading at all-time lows compared to a PB of 1.1x during 2008.
Recent Earnings Release and Management Outlook
- Yangzijiang Shipbuilding reported revenue of RMB15.1 billion for FY2016, representing a 5.8% YoY decline on smaller vessel sizes and contract values. Net profit declined 28.8% YoY. The full statement can be read here.
- Management stated impairment provision was made for vessels under its shipping arm and an impairment loss on property plant and equipment.
- The Group secured a total of 19 shipbuilding orders with an aggregate contract value of approximately US$823 million for FY2016, with its outstanding order book standing at US$4.3 billion ending 2016.
- In 2017, management also believes that macroeconomic factors will continue to pose uncertainties to the industry. However, on a positive note, the Group believes increased demand for commodities shipping, higher scrapping rates and lower new vessel deliveries will help provide some support.
Key Highlights
- Yangzijiang Shipbuilding is amongst the top 10 shipbuilders globally in terms of outstanding order book – No.1 in China and No.4 in the world as of end-January 2017, according to management.
- Its CEO, Ren Yuanlin, said in November 2015 that the Group will focus on the niche markets of ultra-large containerships and clean energy vessels, as well as building better vessels that offer higher loading and lower fuel consumption. To read the full SGX kopi-C profile of Ren, click here.
- Yangzijiang Shipbuilding has a net cash balance sheet position of over S$1.3 billion, based on Bloomberg data.
- According to Bloomberg, consensus expects Yangzijiang Shipbuilding’s earnings per share to increase 5.2% in 2017.
Sembcorp Marine
Stock Performance and Valuations
- Sembcorp Marine registered a total return of -19.3% in 2016, reaching a year low in September. Since the lows in September, the stock has returned approximately 50.6% and on a year-to-date basis, the stock’s total return is at 38.0%.
- From a valuation perspective, the stock currently trades at 50.4x PE ratio and 1.6x PB ratio, with a forecasted 2017 ROE of 4.6%. Historically on a PB basis, the stock is trading at all-time lows compared to a PB of 1.9x during 2008.
Recent Earnings Release and Management Outlook
- Sembcorp Marine recently reported a net profit of S$34 million for 4Q2016 compared to loss of S$537 million for the same period a year ago. For FY2016, the company reported net profit of S$79 million compared to loss of S$290 million a year ago.
- President and Chief Executive Wong Weng Sun noted in a briefing on 22 February 2017 that it had not taken additional impairment charges as "the current provisions are adequate under the present circumstances". Sembcorp Marine made a S$280 million provision for foreseeable losses on contracts work-in-progress and a S$329 million for the Sete Brasil contracts in FY2015.
- As of the end of 2016, net debt on the balance sheet was S$2.94 million compared to S$2.75 million a year ago; cash and cash equivalents stood at S$1,217 million compared to S$627 million at the end of 2015. The full statement can be read here.
Key Highlights
- In acknowledging the challenging outlook and intense competition, management foresees that growth prospects for the offshore and marine industry remain positive in the medium to long term.
- Sembcorp Marine believes increasing enquiries for non-drilling solutions will see an “earlier recovery in demand for fixed platforms, FPSO and FSO conversions and new-builds in the next few years”.
- Sembcorp Marine is also diversifying into LNG with Management noting that rising global demand for gas augers well for its broad-based LNG solutions and capabilities.
- According to Bloomberg, consensus expects Sembcorp Marine’s earnings per share to increase 51.1% in 2017.
Ezion Holdings
Stock Performance and Valuations
- Ezion Holdings registered a total return of -30.2% in 2016, reaching a year low in September. Since the lows in September, the stock has returned approximately 81.0% and on a year-to-date basis, the stock’s total return is at -1.3%.
- From a valuation perspective, the stock currently trades at 0.4x PB ratio, with a forecasted 2017 ROE of 3.5%. Historically on a PB basis, the stock is trading at all-time lows compared to a PB of 0.7x during 2008.
Recent Earnings Release and Management Outlook
- The Group reported a revenue of US$318.2 million for FY2016, 9.4% lower than FY2015. The Group reported a net loss of US$66.6 million in 4Q2016 and a net loss of US$33.6 million for FY2016.
- The Group reported total liabilities for FY2016 at US$1,686.3 million, 9.7% lower than FY2015, mainly due to repayment of loans due to banks and the completion of the sale of assets held for sale. For FY2016, the Group has generated positive operating cash flows of S$145.7 million and free cash flows of S$43.2 million.
- The Group acknowledges that as it is mainly involved with the provision of asset and services to the offshore Oil and Gas industry, it is expecting the industry headwinds to persist for the large part of FY2017. The full statement can be read here.
Key Highlights
- Ezion Holdings is the largest Offshore Services provider listed on SGX. The Group specialises in the development, ownership and chartering of strategic offshore assets to support the offshore energy markets, and is one of the first companies to introduce liftboats in Asia and the Middle East regions.
- The Group’s management strategy, as mentioned in their annual reports, is to maintain a healthy balance sheet. Notably, the company generated positive free cashflow in 2016 after several years in the negative.
- According to Bloomberg, consensus expects Ezion Holdings to return to profitability in 2017, followed by a 38.8% increase in earnings per share for 2018.
Source: Bloomberg (1 Mar 2017)
Previous Market Updates on the MOE Sector
- 2 February 2017: SGX’s MOE Sector sustains 4Q16 Momentum into 2017 – Click here
- 7 February 2017: Recent Moves of Singapore’s Biggest Shipyard Stocks – Click here
- 16 February 2017: Highlights of Singapore’s 10 Largest OSV Players – Click here
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