Shares of Singapore-listed Yangzijiang Shipbuilding (Holdings) rose as much as 3% on Friday after the Chinese company posted better-than-expected results but analysts warned of a challenging outlook.
Yangzijiang’s fourth-quarter net profit rose 24% from a year earlier to 1.04 billion yuan ($206.3 million) on the back of deliveries of high-margin vessels. It is also developing a new offshore yard in Taicang, near Shanghai, and aims to build two jack-up rigs.
By 10:19 a.m., Yangzijiang’s shares were up 2.3% at $1.35, outperforming the broader Straits Times Index which was 0.5% higher. The stock has surged around 45% so far this year.
Maybank Kim Eng said Yangzijiang’s gross margin from its shipbuilding segment grew in 2011 mainly due to efficiency gains in its new yard and continued delivery of high-margin vessels secured prior to the global financial crisis.
“While about 50% of its $4.7 billion order backlog still consists of these highly profitable contracts, we expect margins to taper off progressively over the next few years given the current depressed pricing for new contracts,” the broker said.
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