Yangzijiang Shipbuilding's order intake has been slow year to date, but Goldman Sachs maintains Buy

Overview

This report is Goldman Sachs' event commentary on Yangzijiang Shipbuilding's year-to-date business update. The key message is that the company's new order wins as of May 19, 2026 were below the previous pace, especially with a marked slowdown in new orders from April to mid-May; however, Goldman Sachs maintains its Buy rating, believing the company has cost advantages, strong return capability, capacity expansion room, and the ability to win high-margin orders during the upcycle in shipbuilding.

Core views

Goldman Sachs' core view is that weak short-term order data does not change the medium-term investment thesis. The slowdown in orders mainly stems from geopolitical uncertainty weighing on new order negotiations, as well as the company's active selection of higher-margin, container-vessel-leaning orders; meanwhile, global new shipyard orders in April still saw double-digit year-on-year growth in both volume and value, mainly driven by tankers and bulk carriers, so Yangzijiang's order performance lagged the industry average. Goldman Sachs believes that as capacity constraints ease following softer orders in 2025, the company's capacity expansion progresses, long-term orderbook coverage remains strong, and the negative impact from USTR stays limited, new orders are likely to recover from 2026E onward.

Analysis framework

The report forms its judgment by combining the company's business update, observations on industry shipyard orders, changes in the orderbook, potential strategic investments, and the valuation framework. On valuation, Goldman Sachs uses a P/B vs ROE framework, based on end-2026E BVPS, assigning a target P/B of 2.5x and assuming an average cycle ROE of 24%, cost of equity of 10.2%, and long-term growth rate of 1%, arriving at a 12-month target price of SGD 4.70.

Methodology notes

• Valuation methodsP/B vs ROE valuation

  Deriving the 12-month target price using a target P/B multiple

  Goldman Sachs applies a target P/B of 2.5x to end-2026E BVPS, using a 24% average cycle ROE, 10.2% cost of equity, and 1% long-term growth rate as the basis for derivation.

• Factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs' factor framework uses standardized ranking across metrics such as growth, financial returns, and valuation multiples to help compare a stock's attributes relative to the market and industry peers.

• M&A frameworkM&A Rank

  Scoring the probability of being acquired

  Across its global coverage, Goldman Sachs assesses the likelihood of a company becoming an acquisition target using qualitative and quantitative factors, and classifies the probability into levels 1 to 3; this framework is part of the methodology disclosure section.

• Data toolQuantum

  Goldman Sachs proprietary financial database

  Quantum is used to access company financial history, forecasts, and ratios, supporting in-depth single-company analysis as well as cross-industry and cross-market comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Yangzijiang Shipbuilding (YAZG.SI)

  Coverage subject, rated Buy by Goldman Sachs.

  Strengths

  Has cost advantages, high financial returns, long orderbook coverage, capacity expansion capability, and a tendency to select high-margin orders.

  Weaknesses

  Order wins slowed significantly from April to mid-May, the orderbook declined slightly from end-March, and the current valuation is above the historical average.

  Comparison

  The company's recent order performance lagged the industry average; in April, global new shipyard orders grew by double digits year on year in both volume and value, mainly driven by tankers and bulk carriers.

  Risks

  Steel prices above expectations, stricter USTR regulation on China-built vessels, larger-than-expected declines in ship ASPs, and faster-than-expected capacity expansion by other shipyards.

• Poseidon Corp / Seaspan

  Yangzijiang Shipbuilding plans to acquire a 10% stake in Poseidon Corp; Poseidon is Seaspan's parent company.

  Strengths

  Seaspan is the largest independent container vessel owner and operator, with capacity of about 2.5mn TEU, which may help Yangzijiang secure future container vessel orders.

  Weaknesses

  The investment consideration is relatively large, and order conversion still needs follow-up verification.

  Comparison

  Seaspan accounts for about 7%-8% of the global container fleet and has scale advantages in the container vessel leasing market.

  Risks

  Investment integration, weaker-than-expected order conversion, and fluctuations in container vessel market demand.

• Jiangsu Yangzi Hongda Shipbuilding and Repair

  Yangzijiang Shipbuilding has newly established a wholly owned ship repair services subsidiary.

  Strengths

  Expands into ship repair services, helping supplement service capabilities around the core shipbuilding business.

  Weaknesses

  Management expects no material impact from the subsidiary on FY26E EPS and tangible book value per share, implying limited short-term financial contribution.

  Comparison

  Represents an extension of the shipbuilding value chain rather than an immediate change to the core revenue structure.

  Risks

  Uncertainty around business ramp-up, execution capability, and customer acquisition.

Key data

• Report date2026-05-19The report cover page shows the publication time as 19 May 2026 9:31PM HKT.
• Year-to-date new ordersUS$1.03bnAs of May 19, 2026, representing 23% of management's FY26 target of US$4.5bn.
• New orders from April 1 to May 19US$0.05bnCorresponding to two 1,100 TEU container vessels.
• Average monthly new orders so far in 2QUS$0.03bnSignificantly below the 2025 monthly average of US$0.21bn and the 1Q26 monthly average of US$0.33bn.
• OrderbookUS$22.3bnAs of May 19, 2026, down about 2% from US$22.8bn at the end of March 2026.
• Poseidon Corp / Seaspan investment10% equity stake, consideration of US$825.7mnSeaspan is the largest independent container vessel lessor and operator, with capacity of about 2.5mn TEU, accounting for about 7%-8% of the global container fleet.
• Ship repair subsidiaryRegistered capital of US$100mJiangsu Yangzi Hongda Shipbuilding and Repair is a wholly owned subsidiary, and management expects no material impact on FY26E EPS and tangible book value per share.
• Target priceSGD 4.70Based on P/B vs ROE valuation; target P/B is 2.5x.
• Disclosed current priceS$3.94Used to estimate upside of about 19.3% versus the target price.

Impact & implications

The near-term impact is that the market may focus on the significant slowdown in order wins and the slight decline in the orderbook; the medium-term implication depends on whether the company can enhance its ability to secure future container vessel orders through high-margin order selection, capacity expansion, and the Seaspan-related investment. Goldman Sachs believes that although the current share price is at about 2x P/B, above the historical average, a higher-than-historical-average P/B valuation is justified given the company's focus on its core shipbuilding business, ample cash, position in the industry upcycle, and potential improvement in shareholder returns.

Risks

• Higher-than-expected steel prices may compress shipyard profit margins.
• If USTR introduces stricter rules targeting China-built vessels, it may affect orders and customer decision-making.
• If ship ASP declines exceed expectations, earnings elasticity will weaken.
• If other shipyards expand capacity faster than expected, competition may intensify and affect market share.
• Geopolitical tensions may continue to weigh on potential new order negotiations.
• The current valuation is above the historical average; if order recovery falls short of expectations, the valuation premium may come under pressure.

What to watch

• Management and CFO's online analyst meeting on May 20, 2026 for commentary on orders, USTR impact, and capital allocation.
• Whether new orders recover in 2Q and in the second half from the low level of US$0.03bn average monthly orders.
• Whether the Seaspan-related investment can bring visible container vessel orders.
• The progress of the company's capacity expansion and whether it drives market share gains.
• Changes in steel prices, ship ASPs, and the order mix across tankers, bulk carriers, and container vessels.
• The actual impact of USTR policy on Chinese shipyards' order intake and customer negotiations.