According to CEO, Ren Yuanlin, since the corporate’s IPO listing in November last year, they have been building a stronger foundation to enhance Yangzijiang’s earnings capacity by investing in the strategic expansion of its Maritime fleet.
Over the past 9 months, it has entered into sale contracts to monetise 12 newbuild vessels, with an aggregate gross contract value of approximately US$500 million. The deal is expected to contribute to financial performance in the latter half of this year and for the next two full years.
Given the two to three year shipbuilding cycle, there is a natural transition period before the full maritime investments are realised. But the long-term prospects are looking attractive, despite the upfront capital commitments and expenses required by new builds.
In the meantime, its trilogy of Maritime, Cash Management and Non-Maritime Investment departments are still powering the newly public firm onwards
“Supported by a disciplined capital recycling strategy and a strong balance sheet, we aim to expand both our recurring operating income base, and the capital gains returns ahead. This will create long-term value for our shareholders,” said CEO Yuanlin.
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The Maritime Business: undertakes investments, maritime financing and other maritime services. In H126, the income from this unit increased by 70% to stand at US$51.7 million, driven mainly by higher income from maritime fund assets. This reflects the expanded base of maritime fund asset portfolios as the newbuilds progress.
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Cash Management: optimises any surplus cash and identifies suitable investments. In H126, the income from this department increased by 120% or US$7.9 million to stand at US$14.4 million. This was mainly due to net gains in the fair value of financial assets and liabilities as a result of favourable mark-to-market movements. But the gain was partially offset by lower interest income earned from reduced treasury cash balances.
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Non-Maritime Investments: didn’t contribute as income from this unit dipped by 12% or US$2.2 million to US$15.5 million. The cause was mainly due to lower interest income.
Yangzijiang Maritime’s latest results show a still robust balance sheet with net assets of approximately US$1.8 billion (S$2.3 billion Singaporean dollars). Net assets value per share, excluding treasury shares, equates to 47.47 US$ cents (60.87 a cent in S$).
Headwinds
Despite the rosy picture, there are economic headwinds. Operating costs went up to US$21.4 million v US$6.1m last year, mainly due to increasing voyage costs resulting from higher oil prices, increased transit fees, and a change in chartering strategy, plus higher depreciation foe existing vessels of US$5.5m.
Other expenses increased to US$4.7m in H126 v US$2.3m previously. This was due to higher professional fees, legal fees, finance costs and other operating expenses. Employee compensation remained broadly stable at US$1.2m in H12026. All these factors meant that, the Group’s total expenses increased by 152% or US$19.8m to stand at US$32.7m in H126.
Share of profits of joint ventures and associates decreased to US$6.97m from US$14.6m, reflecting lower profit contributions from the Group’s maritime joint venture investments during the period.
Currency revaluation losses on financial assets were also detrimental in H126, resulting in a loss of US$5.6m v gains last year.
However, despite a significant increase in total expenses in H12026, Yangzijiang Maritime continued its profitability track record with net profit attributable to equity holders of US$44.9 million in H12026. More should accrue in future years as the fleet and operations expand.
