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 Shipbuilding” or together with its subsidiaries, the “Group”) for the financial year ended 31 December 2023 (“FY2023”).
A YEAR TO REMEMBER
IFY2023 was an excellent year for us with the Group delivering its highest ever revenue and net profit. Our efforts in enhancing our shipyards’ operational efficiencies and technical capabilities have enabled us to improve our overall mix of products, producing vessels with a higher market value.
As such, our revenue grew 16.5% year-on-year (“yoy”) to RMB24.11 billion, driven by the delivery of higher value vessels and a favourable exchange rate. With steel costs stabilizing at a relatively lower level throughout 2023, and a higher revenue, our improved margins enabled us to deliver a net profit of RMB4.1 billion, a 57.0% increase from the previous year.
During FY2023, Yangzijiang Shipbuilding secured a total of 97 new orders worth USD 7.1 billion, of which 54% are alternative-fuelled vessels. This brings our total outstanding orderbook as of 31 December 2023 to USD14.5 billion for 182 vessels, which would give us earnings visibility up to 2027.
In November 2023, we were also privileged to win two awards at The Edge’s Billion Dollar Club event. We were selected as the overall winner in the industrial conglomerates and goods sector + industrial goods, shipbuilding category. In addition, the Group also came in top for generating the highest returns to shareholders in the three financial years taken into consideration.
SHIPBUILDING SEGMENT
Sector Overview
2023 was a good year for shipbuilders with global shipyard output increasing 10% yoy to 35m compensated gross tonnage (“CGT”)1. In terms of market share, China yards built 50% of this output, followed by South Korea at 26% and Japan at 14%. Whilst Korean yards dominated the production of Liquified Natural Gas (“LNG”) vessels, Chinese shipyards built the majority of containerships, bulkers and tankers.
Going forward, Clarksons research expects new-build demand for 2024 to continue improving with orders for alternative-fuelled vessels and tankers being the key catalysts. On the supply side, global shipyard capacity remains limited which could potentially drive prices higher.
Fleet Decarbonization to Drive Demand
The commercial shipbuilding market
remains a pivotal component of
the global maritime industry,
playing a crucial role in facilitating
international trade and economic
development. These ships including containerships, bulk carriers,
and tankers, ultimately handle
over 90% of global trade, making
it indispensable for connecting
markets, supporting economies, and
facilitating globalisation. As such,
the need to decarbonise the shipping
industry, within the required
timeline, has sparked consistent
demand for tier-1 shipbuilders, like
ourselves.
We believe that regulatory factors will continue to drive new-build demand in the short- to mid-term. In July 2023, the International Maritime Organization added new and more stringent requirements1 for its Green House Gas (“GHG”) reduction strategy for global shipping. In summary, the industry has to reach net-zero emissions by 2050, IMO has set indicative checkpoints in 2030 and 2040, and lastly regulating a 5-10% uptake of alternative zero or near zero GHG fuels by international shipping by 2030.
In December 2023, the Government in China announced that it would establish a Green Shipbuilding Roadmap2. With China now taking 50% of the global market share3 of shipbuilding, the country aims to see its green shipbuilding technology reach an advanced international level and lead in the global green shipbuilding market by 2030. This is on top of China’s target to hit carbon neutrality by 2060.
Outlook - Raising Targets to Capture Demand
In 2024, we believe that demand
will come mainly from dual-fuel and
alternative-fuelled containerships,
oil tankers and gas carriers. With the number of new build orders
placed over the past three years,
we estimate that containership
demand will peak in 2024. Demand
for oil tankers is expected to remain
similar to 2023 levels, mainly
driven by the ongoing fleet renewal.
Notably, both crude oil tankers
and product oil tankers are highly
in demand. Gas carrier demand
is expected to have a modest rise
in 2024, driven by the increasing
end-market demand. For the gas
carriers, considering our current
order delivery schedule, we will be
targeting small to medium-sized
LNG, Liquefied Petroleum Gas
(“LPG”) and Liquefied Ethylene Gas
(“LEG”) carriers.
With these tailwinds and a shift in product mix to higher value vessels, we are raising our 2024 order-win target by 50% to USD 4.5 billion. My team and I are confident that we will be able to achieve this challenging target. As at the time of writing this statement, the Group has recently secured new order wins for 12 vessels amounting to USD 1.35 billion. This order included 6 methanol dual-fuel 13,000TEU containerships.
From an operational perspective, our yards are expected to be at full capacity in 2024, with expectations to deliver 63 vessels. With raw materials remaining stable, and tier-1 shipyard capacity constraints, we are looking forward to an encouraging FY2024.
SHIPPING SEGMENT
Sector Overview
2023 was not a great year for
shipping rates, characterised by
the continued volatility in the Baltic
Dry Index (“BDI”). In January 2023,
the BDI was at a low of 685 but
spiked to 3,346 in December 2023.
Our strategy during this period has
been to secure only short-term
chartering contracts so that we can
remain adaptable to this market.
While margins reduced from 40.7%
in FY2022 to 34.4% in FY2023, our
nimbleness and our lower costs,
should allow us to be in a better
position versus our peers.
Outlook – Exploring growth
Looking ahead, we expect further
volatility in the BDI. As such we
will continue with our strategy
of signing both spot and charter
contracts for our fleet, to remain
agile in the dynamic market. Bulk
carriers, which account for 25 out
of the 30 vessels that we own, will
continue to comprise the majority
of our fleet. Furthermore, we have
been dedicated to enhancing the
operational efficiency of our fleet,
and committed to transitioning
towards a more sustainable fleet.
REWARDING OUR SHAREHOLDERS
As we continue to excel on the operational front, we are extremely grateful to our shareholders for their unwavering support. With our record net profit, the Board of Directors is recommending a dividend per share of S$0.065 for FY2023, up from S$0.05 in FY2022. This translates to a payout ratio of 33.7%.
APPRECIATION
I would like to extend my deep appreciation to Mr Chen Timothy Teck Leng who will retire from his role as Lead Independent Director and the Chairman of the Audit Committee in the forthcoming Annual General Meeting. Thank you for your invaluable contributions in the past decade and we wish you all the best in your future endeavours.
The Group’s Nomination Committee is actively seeking a qualified candidate to take over as Chairman of the Audit and Risk Committee. An announcement regarding this appointment will be made in due course.
In conclusion, I would like to express my heartfelt gratitude to our Board of Directors and all our stakeholders, customers, suppliers, business associates, employees, and shareholders, for your part in the success of Yangzijiang Shipbuilding in FY2023. I am glad to have you with us as we strive to deliver more value to all our stakeholders.
REN LETIAN
Executive Chairman and Chief Executive Officer
1 Clarksons research via Seatrade Maritime https://www.seatrade-maritime.com/shipyards/china-hits-50-world-shipyard-output-2023
1 https://www.imo.org/
2 China’s green development plan for its shipbuilding industry – https://english.www.gov.cn/news/202312/29/content_
WS658e0238c6d0868f4e8e2944.html
3 Clarkson’s research via SeatradeMaritime –
https://www.seatrade-maritime.com/shipyards/china-cements-position-worlds-top-shipbuilder-2023