Yangzijiang Shipbuilding Shares (SGX:BS6): Outlook Improving, Goldman Initiates at Buy

Yangzijiang Shipbuilding shares (SGX: BS6) have gained 6.53% today, and are attracting renewed attention, with Goldman Sachs initiating coverage with a Buy rating and a price target of S$4, signaling an attractive valuation within the current containership industry upcycle.

This positive outlook comes amidst a complex backdrop of both promising financial results and significant challenges for the Singapore-listed Chinese shipbuilder.

Also coming through today was news of $920million in new deals coming through for the firm, boosting the outlook.

The stock has experienced notable volatility recently, largely influenced by external factors. In February 2025, news of a U.S. proposal to impose substantial fees on Chinese-built vessels entering U.S. ports triggered a sharp sell-off. The share price plummeted 24% in just four days, wiping out approximately S$3 billion in market capitalization.

The markets reacted strongly to the potential implications of this trade measure, despite its uncertain future. Analysts suggest that this sell-off may have been an overreaction, given that the proposal is still under review and its ultimate impact remains to be seen.

Despite these challenges, Yangzijiang’s underlying business performance remains strong. The company reported a record profit of US$580 million for the first half of 2025, a 37% year-on-year increase.

This impressive result was fueled by a substantial order book consisting of 236 ships, valued at a combined US$23 billion, providing revenue visibility through 2030. A significant portion of this order book, approximately 75%, comprises dual-fuel vessel orders, which contribute to higher margins.

Yangzijiang has also been actively expanding its capabilities and capacity. In March, the company finalized the acquisition of a 34% equity stake in Tsuneishi Zhoushan Shipbuilding, a joint venture with Japan's Tsuneishi Holding.

Furthermore, the company is developing a new clean energy ship manufacturing base in Jingjiang City, Jiangsu province. This 866,671 sq m site, adjacent to the existing Jiangsu Yangzi Xinfu Shipbuilding Company, is designed to boost productivity and operational efficiency, aligning with the company's focus on sustainable shipbuilding.

The markets are weighing these competing factors, resulting in a nuanced valuation picture for Yangzijiang Shipbuilding. The company’s strong order book and strategic expansions indicate a solid foundation for future growth, but regulatory risks and legal challenges cannot be ignored.