Hot stock: Yangzijiang Shipbuilding surges over 15% in afternoon trade, responds to SGX query

SHARES of Yangzijiang Shipbuilding spiked on Friday (Sep 23) afternoon on heavy trading volumes, prompting a query from Singapore Exchange Regulation (SGX RegCo).

As at 3.35pm, the counter had climbed S$0.17 or 15.5 per cent to reach an intra-day high of S$1.27 after 118.7 million of its shares changed hands – well above the counter’s average volume of 19 million, according to Yahoo Finance.

SGX RegCo issued a query at 3.40 pm over Yangzijiang’s “unusual price movements”.

The counter later eased to S$1.23 as at 4.04 pm, up S$0.13 or 11.8 per cent with some 129.8 million securities traded.

By the end of the trading session, S$183 million of shares had changed hands and the stock closed 12.7 per cent higher at S$1.24. SGX market strategist Geoff Howie said the volume is more than 6 times its trading turnover average of S$27 million a day seen through 2022.

Based on ShareInvestor data, 2 married deals were recorded during the pre-open at 8.30 am with one seeing 900,000 Yangzijiang shares transacted at S$1.079 apiece, and the other comprising 80,000 securities at S$0.863 per share.

In its response to SGX RegCo after the market closed on Friday, Yangzijiang said the trading activity could be linked to 2 media reports, dated Sep 19 and 20, in connection to its Sep 8 announcement about its entry into a technical assistance and licence agreement with France-based Gaztransport & Technigaz (GTT). The agreement allows the group to construct vessels using GTT membrane technologies.

The first media report was by the Singapore Business Review, which questioned what is ahead for the company’s LNG orders, calling such orders “key catalysts”.

A day later, The Edge carried a report citing CGS-CIMB research analysts’ “buy” rating on the stock at an unchanged target price of S$1.63. The analysts, Lim Siew Khee and Izabella Tan, said the GTT licence will allow the company to build large LNG carriers above 100,000 cubic meters.

Save for these 2 reports, Yangijiang said it is not aware of any other possible explanation for the trading.

Yangzijiang’s share price was last at such levels in April 2022. Since then, the counter had been trading well under S$1.00 up until Sep 16, when it breached the dollar mark to close the trading day at S$1.03. 

Giving more insight, Howie said that globally, shipbuilders were the stock market’s strongest performers over the Asia week. Yangzijiang was also supported by the weakening of the Chinese yuan to the US dollar (USD) this week, he added.

With USD revenues, Yangzijiang’s sensitivity analysis in its most recent annual report maintained that, at group level, net profit benefited from USD strengthening against the yuan, he added. As of Aug 7, the group’s total outstanding order book stood at US$8.1 billion for 134 vessels.