Shares of Yangzijiang Shipbuilding Holdings reached a record high on Friday following the company's announcement of a 26% jump in net profit. The shipbuilder's improved shipbuilding margin contributed to this positive financial performance.
Strong Financials Drive Share Price Surge
Yangzijiang Shipbuilding Holdings shares rose by 1.9% to 1.58 Singapore dollars (US$1.18) on Friday, marking their highest intraday level since the company's listing. The company's first-half net profit reached 1.73 billion yuan (US$241.4 million), surpassing the previous year's figure of CNY1.37 billion. This growth can be attributed to the company's all-time high outstanding order book, valued at US$14.7 billion.
Positive Surprise in Shipbuilding Margin
Citi analyst Jame Osman highlighted Yangzijiang's core gross shipbuilding margin of 18% as a "key positive surprise." This increase was driven by higher-priced orders, a favorable U.S. dollar exchange rate, and moderating steel prices. As a result of these factors, Osman expects the shipbuilder to revise its full-year order win target. The company has already surpassed its initial target of $3 billion with year-to-date order wins amounting to $5.7 billion.
Prospects for Further Margin Improvement
Osman further anticipates improved margins for Yangzijiang Shipbuilding Holdings as the company fulfills its larger orders. By taking advantage of economies of scale through repeat orders, the shipbuilder is poised to continue its upward trajectory.