China: Yangzijiang Shipbuilding Starts 2011 on Positive Note

- Increase of 124% in other income and increase of 210% in other gains gave a boost to the quarterly earnings

- Revenue increased 14% to RMB3.05 billion with comparatively more vessels delivered during the quarter

- Order book stood at 131 vessels worth USD5.38 billion as at 31 March 2011

Yangzijiang Shipbuilding (Holdings) Limited, one of PRC’s leading and most enterprising shipbuilder listed on the SGX Main Board, is pleased to announce record high quarterly earnings for the three months that ended 31 March 2011 (“1Q2011”).

Group’s revenue increased 14% to RMB3.05 billion in 1Q2011 as 14 vessels were delivered (8 from the new yard and 6 from the old yard) as compared with 10 vessels delivered in 1Q2010. Jiangsu Yangzi Changbo Shipbuilding Co., Ltd (“Changbo”) also delivered 3 vessels in 1Q2011. Thus, in total the Group delivered 17 vessels in 1Q2011.

Due to recognition of higher margins from construction and delivery of shipbuilding contracts that were secured prior to financial crisis, the Group’s gross profit margin improved from 23.3% in 1Q2010 to 27.1% in 1Q2011. This helped the gross profit to increase 33% in 1Q2011 to RMB826.6 million.

The operating expenses were kept under a tight leash and remained stable at about 2% of the revenue for 1Q2011.

The other income1 for the Group increased 124% to RMB280.7 million in 1Q2011. The increase was mainly due to increased investments in held-to-maturity financial assets in 1Q2011 as compared to the corresponding period last year.

Other gains for the Group registered a huge jump of 210% to RMB124.3 million in 1Q2011 due to positive mark to market variation for the outstanding contracts denominated in Euro.

The Group’s income tax expenses increased 27% to RMB195.7 million and stood at an effective tax rate of about 17% for 1Q2011. This was after accounting for 5% withholding tax on Chinese subsidiaries’ distributable profits and average corporate tax rate of 13% for the Group with no material adjustments for under or over provision of taxation with respect to prior year.

The Group’s net profit attributable to equity holders increased 63% to RMB954.9 million for 1Q2011 with the net profit margin increasing from 21.9% in 1Q2010 to 31.3% in 1Q2011. The basic earnings per share increased from RMB16.05 cents in 1Q2010 to RMB24.89 cents in 1Q2011.

 

The balance sheet remains healthy with a net cash position gearing wise and cash and cash equivalents of about RMB2.8 billion as at 31 March 2011. Net asset value per ordinary share increased from RMB258.76 cents as at 31 December 2010 to

RMB283.65 cents as at 31 March 2011.

OUTLOOK/ FUTURE PLANS

In whole 1Q2011, the Group secured 14 effective shipbuilding contracts with an aggregate value of USD512.3 million and hence the Group’s order book stood at 131 vessels with value of USD5.38 billion as at 31 March 2011. Amongst the 14 new orders secured, there are 4 contracts for building recently developed 4,800 TEU energysaving container vessels that has proprietary design that meets the current demand for larger capacity vessels with better fuel efficiency.

“We are pleased with the progress of the Group and the record quarterly earnings definitely help in boosting our confidence. With a view to enhance our competitiveness, we will continue to put greater emphasis on developing newer vessel models that are more fuel-efficient and have higher loading capacity. We are on the right track and are proud of the progress as the recent order wins comprise 4 vessels for our newly designed

4,800 TEU energy-saving containership with proprietary design.

We are also looking at increasing our capacity through additional stake in the Xinfu yard and will develop this yard for constructing bigger VLCCs or similar type of vessels.” Mr Ren Yuanlin, Executive Chairman, Yangzijiang

As announced on 1 March 2011, the Group intends to increase its stake from 20% to 60% in Jiangsu Xinfu Shipbuilding Co., Ltd (“Xinfu”). The Group over the next 3 years plans to invest RMB4 billion to convert the Xinfu yard into one that can build very large vessels such as the VLCCs or similarly large containerships. When fully operational with a production area of about 166 hectares, the Xinfu yard is expected to have an annual capacity of up to 3 million DWT, which is equivalent to ten (10) VLCCs or twelve (12) 10,000 TEU containerships.

With the Group’s healthy cash holdings and order backlog, the Board remains confident of delivering continued growth and profitability for 2011.

Source: SGX, April 29, 2011.

 

 

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Posted on April 29, 2011