Yangzijiang under pressure to maintain strong balance sheet

Working capital could rise to finance 13 shipbuilding orders to-date.

Yangzijiang recognizes the need to maintain a strong balance sheet during these trying times, as well as the importance of a strong partner for shipowners looking to build vessels, notes OCBC Investment Research.

According to the research house, working capital may rise as more back-ended loaded orders are executed.

In 3Q16, the group's net gearing was low at 0.6%.

Six shipbuilding orders were terminated while three new orders of 1900 TEU containerships were secured in 3Q16.

Three of the terminated orders have not started construction, and YZJ is seeking buyers for the remaining vessels.

An average of about 20% down payment of contract value had been collected.

YTD, YZJ has secured 13 shipbuilding orders worth about US$650m. This brings its outstanding order book to S$4.4b as at end 3Q16, comprising 85 vessels.

Currently, the company's current strategy is to chase for new orders as long as they are not loss-making.