Yangzijiang Shipbuilding (Holdings) BS6 has reported earnings of RMB1.44 billion ($280.8 million) in the 2HFY2022, 30% lower than the earnings of RMB2.06 billion in the corresponding period the year before.
This brings the group’s total earnings for the FY2022 to RMB2.81 billion, 24% lower y-o-y.
The drop in earnings for the 2HFY2022 and FY2022 is primarily due to the decline in profit from discontinued operations. The lower share of results of associated companies and joint ventures (JVs) and lower other gains also led to the lower y-o-y earnings.
During the 2HFY2022, revenue for continuing operations increased by 17% y-o-y to RMB11.0 billion due to higher shipbuilding and shipping revenue underpinned by the fully utilised shipbuilding capacity and shipping fleet. This was offset by a dip in revenue for “others”.
2HFY2022 gross profit grew by 46% y-o-y to RMB1.77 billion. Gross profit margin increased by three percentage points y-o-y to 16%.
Other interest income fell by 6% y-o-y to RMB200.2 million while others in other income increased by 169% y-o-y to RMB92.3 million.
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During the 2HFY2022, the group saw other losses of RMB72.6 million due to forex losses of RMB258 million and partly offset by RMB141 million of fair value gain on derivative financial instruments and RMB44 million of subsidy income. The period’s other losses were down from the other gains of RMB605.8 million in the 2HFY2021.
In the same period, the group reported a reversal of impairment loss of RMB169.6 million from the impairment loss of RMB397.3 million.
Finance costs increased by 53% y-o-y to RMB106.8 million due to higher bank borrowing costs.
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Share of results of associated companies and JVs fell by 77% y-o-y to RMB7.6 million.
Profit before income tax increased by 32% y-o-y to RMB1.83 billion.
Profit from continuing operations increased by 36% y-o-y to RMB1.46 billion. Meanwhile, there was no profit from discontinued operations in the 2HFY2022, down from RMB973.1 million in the 2HFY2021 after the spin-off of the group's financial unit.
Revenue for continuing operations during the FY2022 increased by 37% y-o-y to RMB20.71 billion due to higher revenue from its shipbuilding and shipping segments and offset by the lower revenue from “others”.
FY2022 gross profit grew by 46% y-o-y to RMB1.77 billion.
Gross profit increased by 53% y-o-y to RMB3.2 billion. Gross profit margin increased by one percentage point to 15%.
Other gains during the FY2022 fell by 76% y-o-y to RMB233.1 million.
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During the FY2022 the group reported a reversal of impairment loss of RMB78.9 million from the impairment loss of RMB358.4 million.
Share of results of associated companies and JVs fell by 86% y-o-y to RMB13.1 million.
Profit before income tax increased by 26% y-o-y to RMB3.30 billion.
Profit from continuing operations increased by 31% y-o-y to RMB2.62 billion while profit from discontinued operations fell by 89% y-o-y to RMB194.6 million.
As at Dec 31, 2022, cash and cash equivalents stood at RMB10.78 billion.
A final dividend of 5 cents per share has been declared for the period, representing a 36% payout based on the group’s fully diluted earnings per share (EPS) of 71.25 RMB cents for the FY2022.
The final dividend is also unchanged from FY2021’s final dividend.
Since the group’s last announcement in November 2022, it has secured four more units of vessels in 2022 and 14 more units of vessels in 2023. This brings its total outstanding orderbook of US$11.03 billion ($14.79 billion) for 149 vessels, extending its revenue visibility to the end of 2025.
The group adds that its order-win strategies have steadily shifted to alternative fuelled vessels and dual fuel vessels with 27% of its outstanding orderbook classified as eco-friendly vessels as at Dec 31, 2022, up from the 15% in the year before.
In FY2022, the group built a total of 71 vessels which exceeded its full year target of 70 vessels, of which 67 units were delivered to customers and 4 units were added into the group’s own fleet.
Looking ahead, the group believes that the shipping industry is expected to see a potential turnaround on the back of China’s reopening. Demand for shipping is expected to improve in 2023 boosted by the seasonal cycles after the Chinese New Year period and lower spot rates compared to forward shipping rates.
‘2022 was a remarkable year for Yangzijiang Shipbuilding as we delivered record numbers post the spin-off of our investment segment. Our shipyard has hit new levels of operational efficiency with the yard delivering 71 vessels during the year. In addition, our research and development (R&D) team has expanded our capability to build more sophisticated and greener vessels such as the liquefied natural gas (LNG) carrier, dual fuel vessels with ammonia-ready tanks and methanol dual fuel engines. All of these bode well for our future growth as we keep a firm focus on long-term objectives such as sustainable profitability and growth,” says Ren Letian, executive chairman and CEO of Yangzijiang Shipbuilding.
“Yangzijiang Shipbuilding is well positioned to progressively convert a sizeable amount of its record-high order book of US$11 billion. As such, we expect to generate healthy cash flow in the coming years, allowing us to generate sustainable returns to our shareholders,” he adds.
Acquisition
In a separate announcement, Yangzijiang says it has acquired the entire issued share capital of Jiangsu Jiasheng Gas Co., Ltd (Jiasheng Gas) for RMB430.1 million. The acquisition was made through the group's wholly-owned subsidiary Jiangsu Yangzijiang Shipbuilding Co Ltd.
Upon the completion of the acquisition, the group will own an indirect 100% equity interest in Jiangsu Yangzi Jiasheng Terminal Co., Ltd (formerly Odfjell Terminals (Jiangyin) Co., Ltd.) through Jiasheng Gas.
In its statement, the group says it intends to convert Jiangsu Yangzi Jiasheng Terminal's petrochemical terminal site and adjacent land in the upstream Yangtze River region to an LNG terminal facility once it has obtained approval from the government.
The group also intends to build LNG filling and storage facilities on the land site adjacent to Jiangsu Yangzi Jiasheng Terminal, which Jiasheng Gas also owns. Together with the terminal service, the group aims to build up an integrated LNG supply chain including complete terminal service, LNG filling, storage and distribution in the upstream Yangtze River region, which will serve as a LNG logistics hub.
Shares in Yangzijiang closed 4 cents higher or 3.05% up at $1.35 on Feb 22.
