The shipping sector is an important one for the global economy.
Many goods are shipped across the seas and ships are an integral part of the world’s supply chains.
Shipping companies provide services such as shipbuilding and ship repairs that help to grease the wheels of these supply chains.
We introduce three promising shipping companies that recently posted higher earnings that you can consider for your buy watchlist.
Yangzijiang Shipbuilding (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, is one of the largest non-state-owned shipbuilding companies in China.
The blue-chip group operates four shipyards in Jiangsu province that can produce a broad range of commercial vessels such as large containerships, bulk carriers, and LNG carriers.
For the first half of 2024 (1H 2024), YZJ’s revenue rose 15.3% year on year to RMB 13 billion.
Gross margin expanded by 8.1 percentage points, jumping from 18.6% in 1H 2023 to 26.7% in 1H 2024.
The shipbuilder’s net profit soared 77.2% year on year to RMB 3.1 billion.
For YZJ’s third quarter of 2024 (3Q 2024) business update, the shipbuilder continued to report a strong order book of US$22.1 billion as of 7 November 2024.
This order book is up significantly from the US$14.5 billion reported at the end of 2023.
In early December, YZJ secured shipbuilding contracts for another 21 vessels with a total contract value of US$2.6 billion.
These contracts are slated for deliveries between 2027 and 2029.
In total, YZJ secured 119 effective shipbuilding contracts up till 2 December 2024 with an aggregate value of US$14.3 billion.
Management is optimistic about the industry demand outlook as oil tankers and gas carriers continue to fuel newbuild orders.
Containerships and crude oil tankers should see a compound annual growth rate (CAGR) of 3.1% and 2.5% up till 2029, respectively.
The growth for LPG (liquified petroleum gas) is projected to be higher at 5.5% CAGR up till 2029, while demand for LNG carriers is expected to increase by 3.6% CAGR over the same period.
With demand set to increase for these types of vessels, the future looks bright for YZJ.
Beng Kuang Marine (SGX: BEZ)
Beng Kuang Marine, or BKM, provides engineering services that includes repair and maintenance and the production and supply of customised pedestal cranes and deck equipment.
The group also provides comprehensive corrosion protection services along with project management and consultancy services.
2021 saw the commencement of BKM’s asset-light strategy as the group completed a secondary placement of shares at S$0.09 per share.
By 2023, the group was generated a profit before tax of S$10.8 million on revenue of S$79.2 million, a turnaround from the loss-making years of 2021 and 2022.
BKM reported a sparkling set of earnings for the first nine months of 2024 (9M 2024).
Revenue surged by 62.8% year on year to S$86.7 million while gross profit soared 91.7% year on year to S$30.7 million.
The group’s gross margin improved by 5.3 percentage points to 35.4% for 9M 2024.
Profit before tax shot up fivefold year on year from S$4.16 million to S$20.8 million.
BKM is advancing on its strategy objectives to evolve the business into “BKM 2.0”.
Its key focus areas are strategic partnerships and the development and incubation of new businesses and ventures.
The group will also enhance its core strengths and strive for a capex-light, service-centric model.
Singapore Shipping Corporation (SGX: S19)
Singapore Shipping Corporation, or SSC, has businesses in ship ownership, ship management, ship agency, and terminal operations.
For the first half of fiscal 2025 (1H FY2025) ending 30 September 2024, SSC saw revenue rise 10.6% year on year to US$25.3 million.
Operating profit, however, dipped by 4.8% year on year to US$4.5 million.
Net profit surged by 72% year on year to US$7.7 million because of exchange gains.
SSC generated a positive free cash flow of US$11.7 million for 1H FY2025, 29% higher than the US$9.1 million churned out a year ago.
The group saw stable results for its ship ownership division and are optimistic about higher charter rates in the near term.
The agency and logistics segment also recorded an improvement in business volumes compared with 1H FY2024.
SSC will continue to evaluate suitable investment opportunities.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
