Yangzijiang Shipbuilding shareholders pull stock down 3.3% on margin-dilutive orders
The counter dips as much as 5.3% to a two-month low, but pares some losses to close 3.3% down
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[SINGAPORE] Shares of Yangzijiang Shipbuilding fell on Wednesday (May 20) as investors reacted to its admission that current market demand for small- to mid-size vessels will be relatively dilutive to shipbuilding margins compared with larger vessels.
The counter fell to as low as S$3.73 at 10.40 am, down by S$0.21 or 5.3 per cent, with 25.7 million shares having changed hands. That was its lowest price in more than two months; it last traded lower than this on Feb 23.
It later pared some of these losses to close 3.3 per cent down at S$3.81. About 50.7 million shares changed hands throughout the day, making it the second-most traded stock by volume.
Wednesday’s drop in share price came despite the company reporting on Tuesday that it had secured US$1.03 billion in new orders for the year to date, bringing its outstanding order book to US$22.3 billion.
Yangzijiang’s Q1 order wins brought the shipbuilder closer to its target of US$4.5 billion for the 2026 financial year, despite geopolitical tensions weighing on sentiment in the global shipbuilding market.
Citi analyst Luis Hilado said in a Wednesday note that while the company’s confidence in achieving that target “partly addresses” fears, new orders of small to medium-sized vessels will largely generate lower margins than large vessels. This was openly acknowledged by Yangzijiang Shipbuilding in its Q1 briefing.
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Though there are other factors such as steel and labour costs, the future headwind likely drove the intra-day share price weakness on Wednesday, he added.
This will “only dilute margins” from the latter parts of the 2028 financial year. Shipbuilding margins in 2026 are expected to be relatively stable, even as they are impacted by the weaker US dollar against the Chinese yuan.
“Concerns on the lower margins of new, smaller vessel orders will likely pressure the share price in the near term,” said Hilado, setting a target price of S$4.85 with a “buy”.
“We view this as an opportunity as we believe that healthy H1 results will calm the short- to medium-term earnings fears.”
The potentially accretive impact of the US$825.7 million acquisition for 10 per cent of Poseidon Corp and indications of targeting a lower net cash balance could also lead to a potentially higher dividend payout in the second half of 2026, he added.
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