Hot stock: Yangzijiang Shipbuilding’s shares fall following announcement of arbitration proceedings

SHARES of Yangzijiang Shipbuilding tumbled on Monday (Oct 14) morning, after the China-based shipbuilder announced in a regulatory filing on Saturday that arbitration proceedings had been filed in London two years ago against three of its units over the orders of 10 vessels worth US$900 million for alleged breach of contract.

The counter hit an intra-morning low of S$2.30 at 9.03 am, falling 8.3 per cent or S$0.20 amid heavy trading at the open.

As at 11.44 am, Yangzijiang was the most actively traded counter by both value and volume. The counter recovered slightly to trade at S$2.41, down 3.6 per cent or S$0.09, with 33.8 million shares having changed hands.

No married deals were recorded in early trade, ShareInvestor data showed.

The first tranche of arbitration hearings against the Yangzijiang units is scheduled for November 2024. Its units were instructed to defend against the claims in the arbitration proceedings.

Customers are claiming US$835 million for compensation including loss of profits as well as refund of the payments made, which total US$3.3 million.

However, Yangzijiang said the claims are not expected to have a material adverse impact on the group’s financial position for the financial year ending December 2024.

It also noted that there was substantive progress in the arbitrations only during the course of this year, and its expert witness said that the quantum of the claims is “incorrectly measured and highly inflated”.