Yangzijiang grieves three more scrapped shipbuilding orders in 2Q16

How badly will its US$80m orderbook be hurt?

Yangzijiang Shipbuilding continues to sail through a bumpy year following successive vessel cancellations, as three more orders were scrapped in 2Q16.

According to DBS Group Research, these were for one 10k TEU containership, one 82,000DWT and one 64,000DWT bulk carrier.

However, the business does not expect the financial impact to be hefty as the vessels have yet to start construction.

“Management does not rule out the possibility of more cancellations given the challenging market conditions, but it is unlikely to be high unless the shipping market deteriorates further,” DBS Group Research said.

Yangzijiang’s net profit sank 7% QoQ to Rmb478m in 2Q16, and 36% YoY to Rmb448m in the previous quarter, which reported a total of eight vessel cancellations.

Despite the back-to-back slump, Yangzijiang secured orders worth US$80m for four 1,800 TEU containerships in 2Q16, lifting YTD wins to US$590m. This made up only 24% of its internal target of US$2.5bn.

“Management acknowledged that demand for almost all types of commercial vessels remains weak, but they are hopeful to achieve the target through R&D and marketing efforts, as well as attractive pricing and payment terms strategy,” DBS Group Research explained.