主席致词
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present to you the annual report of Yangzijiang Shipbuilding (Holdings) Ltd. ("Yangzijiang" or together with its subsidiaries, the "Group") for the financial year ended 31 December 2022 ("FY2022").
MILESTONE YEAR
In FY2022, we managed to achieve year-on-year ("yoy") revenue growth of 37% to RMB20.71 billion on the back of a record-high number of vessel deliveries to our customers. In addition, we made progress regarding our venture into green vessels with our technology collaboration with liquified natural gas ("LNG") membrane containment specialist, Gaztranport & Technigaz ("GTT"). Shortly after, we clinched our maiden contract for the construction of large-scale LNG vessels. The breakthrough into clean energy vessels, as well as higher dual-fuel vessel demand, drove our order wins in 2022. As such, we ended the year with a historic-high orderbook of US$10.5 billion.
INVESTMENT SEGMENT SPIN-OFF
On the corporate side, Yangzijiang completed the spin-off of its investment segment, Yangzijiang Financial Holding ("YZJFH"), which was listed on the mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 28 April 2022. Following that, we repositioned ourselves as a pure-play shipbuilding company with greater flexibility to grow and capitalise on the current state of play in the shipbuilding industry. Since the corporate exercise, we managed to unlock the values of both the existing entity and the new investment business entity as we saw an overall improvement in shareholders' value.
SHIPBUILDING SEGMENT
Sector Review
On the whole, 2022 was another positive year for the global shipbuilding industry. Global newbuild order
value saw a year-on-year increase of 6% to US$124.3
billion in spite of the 20% decline in total volume in
terms of compensated gross tonnage ("CGT").
On average, pricing has gone up by 15% due to the shift in demand towards more sophisticated ships such as LNG carriers and alternative fuel vessels. While orders for greener alternatives have risen, new orders for containers, tankers and bulkers all dropped in 2022.1
For the second consecutive year, China topped the chart by securing 49% of the global new orders in 2022. South Korea came in second at 38%. In terms of vessel completion, China again has the lion's share with 45%. China managed to grow its market share in the LNG carrier space in 2022, a segment that was traditionally dominated by South Korean shipbuilders.2
Regulatory Shift
As part of its strategy to reduce greenhouse gas ("GHG")
emissions from ships, the International Maritime
Organisation ("IMO") introduced the Energy Efficiency
Existing Ship Index ("EEXI") and the Carbon Intensity
Indicator ("CII") rating, which came into effect in January
2023.3
EEXI, which aims to improve the technical performance of existing ships, has prompted technical modifications in many vessels such as the installation of engine power limitation devices. Meanwhile, the CII rating assesses the operational energy efficiency of ships.
The transition towards green vessels has gained traction in recent years, particularly in 2022, in anticipation of a major regulatory shift. Vessel owners have been realigning their fleet renewal decisions to fit the new requirements with more orders for energy-efficient and green vessels. Furthermore, the regulations have also expedited the fleet renewal timelines of certain ship owners in order to comply.
Inroads into Green Vessels
In FY2022, Yangzijiang entered into a collaboration with
GTT, a French LNG membrane containment specialist.
The Group became the first non-state-owned shipyard
in China to obtain the GTT license for the construction of
vessels using the GTT Mark III membrane technologies.
GTT membrane tanks are used to contain liquefied gas
at low temperatures in shipping, onshore, and offshore
storage. With the collaboration, Yangzijiang will be able
to move up the technological value chain and provide
LNG vessels solutions of greater sophistication.
The Group clinched four (4) 8,000 twenty-foot equivalent unit ("TEU") LNG dual-fuel containerships from its repeat customer, Pacific International Lines. These vessels will be built with the GTT Mark III membrane containment tank system which is ammonia ready.
Consistent with the global trend, Yangzijiang has made significant progress in its penetration into the green vessel space. In October, the Group secured a contract to build two (2) units of 175,000 cubic meter ("CBM") LNG carriers from a European customer, which marked the Group's foray into the large-scale LNG carrier space. These vessels will be equipped with GTT Mark III Flex membrane tanks, which are safer and more efficient. Earlier in 2022, we secured our very first orders for two (2) units of 36,000 CBM liquefied ethylene gas ("LEG") carriers. Besides that, we also clinched a higher number of orders for LNG dual-fuel vessels for the period under review including, among others, twelve (12) units of 16,000 TEU LNG dual-fuel containerships.
Record-high Orderbook
Yangzijiang clinched a total of 50 new vessel orders
which amounted to an aggregate value of US$4.4 billion
in FY2022. This was double the value of our initial US$2.0
billion target set out at the beginning of the year.
The new contract wins brought our total outstanding orderbook to a record high of US$10.5 billion as at 31 December 2022. Apart from the higher absolute amount, our current orderbook of vessels generally commands a higher average contract value.
In the mix, we saw an increase in the total number of clean energy-related vessels following our efforts to ramp up technical capabilities. Compared to 31 December 2021, LNG dual-fuel vessels doubled from 15 to 31 as of end-2022, along with new types of vessels such as LEG vessels and large-scale LNG carriers.
Productivity Boost
In 2022, we managed to produce a record amount of 71
vessels from our shipyard, which exceeded our initial
delivery target of 70 vessels. Out of the 71 vessels, 67
of those were delivered to our customers and 4 vessels
were added to our fleet. The high number of deliveries
was attributed to our investment in optimising shipyard
processes, technology adoption, as well as human
capital over the years.
Delivering the World's Largest Containership
Notably, the Group also started construction works
for a 24,000 TEU ultra-large containership in 2022, the largest containership in the world with an actual
capacity of 24,346 TEU4. The vessel was successfully
delivered to our customer on 9 March 2023, which
marked a significant milestone for Yangzijiang. This was
a testament to the Group's technical capabilities, being
one of the first shipbuilders in the globe to deliver a
vessel of such scale. Currently, we have 5 more 24,000
TEU ultra-large containership under construction at
our shipyard.
SHIPPING SEGMENT
Following the spin-off of our investment business, our shipping segment has emerged as the second-largest revenue contributor to the Group in FY2022. The shipping segment continued to be a key support to our main shipbuilding segment, providing a recurring income source and earnings resilience of our overall revenue. During the year, we grew our fleet from 26 vessels to 31 vessels, which improved the diversity of our portfolio in terms of vessel type and vessel size. This has allowed us to better serve our customers.
A COMPREHENSIVE APPROACH TO SUSTAINABILITY
As one of the largest private shipbuilding companies in China, we are well aware of the role and impact we have when it comes to advancing the industry's sustainability agenda.
In the second half of 2022, the Group established an environmental, social, and governance ("ESG") committee comprising both internal members and external advisors. The committee has since established a systemic framework and laid out the Group's ESG commitments concerning decarbonisation, indigenous partnerships, human capital, local community, and equality.
The Group also introduced a two-pronged strategy to meet the Group's ESG goals. The first strategy is a direct approach where we aim to reduce our GHG emissions through the transition to renewable energy, better management of water and electricity, as well as improving our raw material efficiency. The second approach has to do with our foray into clean energy vessels. We are making investments to upskill and broaden our capabilities to become a key player in the green vessels space.
At Yangzijiang, we consistently prioritise good corporate governance. In 2022, the Group was awarded runner-up for the "Most Transparent Company Award" in the industrial category at the Investor's Choice Awards 2022 hosted by the Singapore Securities Investors Association ("SIAS"). The accolade was in recognition of our excellence in adopting good governance practices and transparency. Going forward, we will continue aiming for better disclosure standards for the betterment of the investment community.
OUTLOOK
Shipbuilding
FY2023 will be a pivotal year for the shipbuilding
industry with the EEXI and CII ratings officially coming
into effect. Due to that, the order momentum seen in
alternative fuel and dual-fuel vessels in recent years
will continue to drive the shipbuilding industry. Demand
will be driven by shipowners wanting to replace their
fleet to be compliant. Meanwhile, the overall supply
landscape continues a limiting factor as new shipyard
capacity will only come on stream in 3 to 5 years' time.
The imbalance in the demand-supply equilibrium has
pushed prices for clean vessels higher.
Based on the industry outlook, Yangzijiang has decided to increase its order-win target for FY2023 by 50% from the initial US$2.0 billion to US$3.0 billion. With the investment put into increasing the operational efficiencies in our production, the Group is positive in converting a good portion of our order book, as well as delivering higher quality vessels for our customers in a timely manner. With that, we are confident in making a big step forward towards becoming one of the top shipbuilding companies in the world.
Shipping
In general, the outlook for the shipping business
is expected to be relatively uncertain in 2023. The
weakness in the global economy could potentially deter
demand for shipping. At the time of writing (March
2023), we have already witnessed a fair bit of volatility
in the first quarter of 2023 with the Baltic Exchange Dry
Index falling to the 500s in February and subsequently
recovering to 1,500s in mid-March.5 Nonetheless, the
Group, with a diversified fleet portfolio, is confident
in weathering through the uncertainties and even
capitalising on potential opportunities in 2023.
Others
Beyond the shipbuilding and shipping segments,
Yangzijiang is currently working towards converting
its existing chemical terminal located on the shore of
Yangtze River to an LNG terminal equipped with LNG
storage and distribution infrastructures. With that, we
will have greater exposure across the maritime value
chain through the provision of LNG terminal services,
LNG storage and distribution, whilst strengthening the
collaborations with LNG shipping liners as well as LNG
traders. Overall, the new initiative is expected to bring
greater resilience and diversification to our revenue
streams.
REWARDING OUR SHAREHOLDERS
On the back of our commendable financial performance, the Group continued our consistent trend of paying out dividends to our shareholders. For FY2022, we proposed a dividend per share of S$0.05, which will translate to a 36% payout ratio. This was significantly higher than the 25% payout ratio for FY2021. The strong dividend payout is a testament to our commitment to rewarding our shareholders for their loyalty and support all these years. On top of that, we also paid out dividend in specie in the form of YZJFH shares during the year, which approximately amounted to RMB20 billion in total.
APPRECIATION
On behalf of the Board, I would like to convey my appreciation to a couple of senior personnel who left the Group in FY2022. We want to thank Mr. Teo Yi-Dar for his years of service as our non-executive and lead independent director and Ms. Liu Hua for her contribution as the chief financial officer for the past one-and-a-half decade.
On a related note, we are pleased to have Ms. Liu Hua back with us as our new non-independent non-executive director. Notably, the appointment was a landmark moment for the Group with her being the first female director to sit on the Board. This was a huge step forward for Yangzijiang with respect to improving gender diversity at all levels of our organisation.
Besides that, the Group would like to welcome Mr. Leon Yee Kee Shian, our new independent director, and Mr. Raymond Poh Boon Hu, our new independent non-executive director. I look forward to working closely with all of you as fellow directors to steer the Group forward.
To end my note, I would like to thank all our stakeholders including customers, suppliers, business associates, employees, and shareholders, for your part in the success of Yangzijiang in FY2022. As we move into a new year, we are committed to, once again, delivering greater value to all of you.
REN LETIAN
Executive Chairman and Chief Executive Officer
1 Clarkson Research via Hellenic Shipping News – https://www.hellenicshippingnews.com/shipbuilding-review-2022-record-orders-for-alternative-fuel-orders/
2 Clarkson Research via Global Times – https://www.globaltimes.cn/page/202212/1282921.shtml
3 International Maritime Organization – https://www.imo.org/en/MediaCentre/HotTopics/Pages/EEXI-CII-FAQ.
aspx#:%7E:text=From%201%20January%202023%20it,(CII)%20and%20CII%20rating
4 Offshore Energy – https://www.offshore-energy.biz/msc-shatters-records-with-delivery-of-24346-teu-msc-irina/
5 Trading Economics – https://tradingeconomics.com/commodity/baltic