Back to basics: Yangzijiang jumps into strategic shift with $350m delivery deal to Oz

The shipbuilder is going back to its core.

Despite troubles hounding its chairman, Yangzijiang has announced that it has won contracts for four 260,000 deadweight-ton Very Large Ore Carriers (VLOCs) from an Australian company.

According to OSK DMG, the vessels have an estimated value of $330-350m (USD260-280m), and are set to be delivered between FY16-17.

This deal marks the first time Yangzijiang has won orders from Australia.

“This represents a strategic shift away from the non-core businesses back into Yangzijiang's key competencies. While we have had no issues with its previous strategy of diversification, we opine that this strategic shift could be strongly positive for investor sentiment,” noted the report.

Here’s more from OSK DMG:

We estimate the value of the vessels at USD260-280m, bringing YTD order wins to c.USD1.35bn, well ahead of schedule to meet its own target of USD1.5-2.0bn wins this year. Also, Yangzijiang has held the naming ceremonies for the fourth and fifth 10,000TEU containerships, successfully delivering them to Seaspan.

Additionally, Chairman Ren Yuanlin commented that Yangzijiang's "focus remains on our core shipbuilding business. Our key strategy is to redirect attention from our non-core
businesses into our core shipbuilding related businesses..The Group will gradually reduce our investment in non-core businesses and eventually divest [them]".