To The Moon

$YZJ Shipbldg SGD(BS6.SI)$

Pros:

1. IMO Climate Policy Tailwinds: The IMO’s 2023 GHG strategy (net-zero by 2050, 40% carbon intensity reduction by 2030) positions YZJ to capitalize on demand for next-generation, fuel-efficient vessels. This aligns with its R&D focus on LNG/ammonia-powered ships.

2. Dividend Resilience: The company declared a SGD 0.12/share dividend (FY2024), raising its payout ratio to 38.6% (vs. 32.1% in FY2023), signaling management confidence in liquidity despite cyclical pressures.

Cons:

1. Cyclicality Risks: Shipbuilding remains one of the most volatile industries, with multi-year boom-bust cycles. While current orderbooks are strong (2025-2027 deliveries), profitability could erode rapidly if global trade slows or financing costs rise.

2. Geopolitical Overhang: Proposed U.S. levies on Chinese-built ships (under consultation as of March 2025) create uncertainty for YZJ’s COSCO-linked contracts. A 10-15% tariff could pressure margins on 12-15% of its orderbook.

Conclusion & Strategy: YZJ’s share price near SGD 2.20 appears to reflect cyclical trough valuations (P/B: 0.9x vs. 5-year avg. 1.3x). However:

• Catalysts to Watch: Monthly orderbook updates (target >USD 1.5B quarterly inflows), progress on U.S. tariff clarity, and spot freight rate trends.

• Tactical Play: Consider scaling in with a SGD 2.10-2.25 accumulation range. Maintain a stop-loss at SGD 1.95 (below 2024 low) and take partial profits above SGD 2.60 (50% retracement of 2023-2024 decline).

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Market conditions may change rapidly—perform independent due diligence before trading. Past performance is not indicative of future results.