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YZJ Q4 net profit jumps 12 per cent

YANGZIJIANG Shipbuilding saw its fourth quarter net profit jump 12 per cent on higher turnover, other income and lower finance expenses.

Net profit for the quarter ended Dec 31, 2017, was higher at 677.92 million yuan compared to 607.84 million a year before.

Revenue rose 15 per cent to 6.35 billion yuan on higher contributions for all three shipbuilding related segments.

The group delivered six vessels in Q4, down from nine for the corresponding quarter last year. But Q4 shipbuilding revenue was higher at 4.34 billion yuan, up from S$3.98 billion yuan for a year before, due to progressive construction of more larger containerships during the period.

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Revenue contributions for trading business and other shipbuilding-related businesses were also higher on higher volume of trading activities and higher income from ship chartering.

Interest income derived from held-to-maturity financial assets for Q4 were 293.3 million yuan, down from 311.76 million yuan for a year-ago period.

Micro-finance business generated lower net interest income for Q4 of 15.04 million, compared to 32.55 million for the corresponding quarter in FY16 due to lower loan balance.

Gross profit for Q4 was down by 34 per cent at 944.20 million yuan mainly on 1.20 billion yuan of provision for expected losses on construction contracts recognised during the quarter.

Other income for Q4 surged 65 per cent year-on-year to 505.13 million yuan while finance costs were 73 per cent lower at 39.15 million yuan compared to a year ago.

Full-year net profit went up by 67 per cent to 2.93 billion yuan.

Earnings per share for FY17 were 75.59 RMB cents, up from 45.73 RMB cents for FY16.

In 2017, YZJ secured new orders for 74 vessels with total contract value of US$2.1 billion, more than doubling the same in 2016. The shipbuilding group's Yangzi Yard was ranked second in the world in terms of new orders received, according to ship brokers, Clarksons Platou.

As at the end of FY17, the group has an outstanding order book of US$4.7 billion for 123 vessels.

During the year, contracts for nine vessels placed with the group were terminated, but downpayments from these contracts were recognised in accordance to accounting policy. Of these nine vessels, six have been constructed and new buyers were found for five constructed vessels.

Net asset value per share as at Dec 31, 2017, was 652.20 RMB cents, up from 592.20 RMB cents a year ago.

The group proposed a final dividend of 4.5 Singapore cents per share for FY17, up from 4.0 Singapore cents per share for FY16.

The group benefited from improved market conditions for shipbuilding industry, especially for dry bulkers in 2017.

Executive chairman Ren Yuanlin said: "New order taking (for 2017) has exceeded our target. Vessel deliveries have been on or ahead of schedule.

He acknowledged that shipbuilding industry is cyclical, but expressed confidence in the strength of the long-term shipbuilding demand.

YZJ will also benefit from a consolidation in China's shipbuilding industry, which is expected to benefit strong shipyards, he added.