Target LNG carrier! Yangtze River Shipbuilding issues shares to expand new business

2017-09-06 10:24

Image: March 31, New Yangtze Shipbuilding Two 27500 cubic meter LNG ships were both signed and delivered, achieving Yangtze River Shipbuilding Group's breakthrough in high-end technology.

Yangtze River Shipbuilding's share financing is targeting the LNG ship market, considering the acquisition of overseas companies with LNG ship technology to enhance its competitiveness in the LNG ship market.

Yangtze River Shipbuilding, listed in Singapore, announced last week that it will issue 137 million shares through a private placement to raise S$209 million (approximately US$153.8 million). The share placement will be issued to institutions and other investors at S$1.53 per share.

Yangtze River Shipbuilding stated that 50% of the net proceeds from the sale of shares will be used to fund new investments and business expansion, expanding new businesses through mergers and acquisitions, joint ventures, or strategic alliances when opportunities arise. The remaining portion will be used for general purposes such as the company's daily capital turnover.

Industry insiders say that Yangtze River Shipbuilding's next acquisition target will be an overseas company with LNG technology knowledge, thereby enhancing its competitiveness in the LNG market.

Ren Yuanlin, chairman of Yangtze River Shipbuilding Group, previously stated in an interview with the media that there are still some bright spots in the market, such as ultra-large ore carriers (VLOC) and small LNG ships and other clean energy vessels. In the first quarter of this year, Yangtze River Shipbuilding delivered two LNG ships for the first time. In the future, Yangtze River Shipbuilding hopes to expand its share in this special ship construction market.

In addition, analysts at DBS Bank believe that raising funds is a precursor to mergers and acquisitions, and it is expected that Yangtze River Shipbuilding will use the funds raised from the share placement to acquire Yangzi Xinfu 's remaining 20% stake.

In November 2010, Yangtze River Shipbuilding purchased a 20% stake in Xinfu Shipyard and increased its stake to 80% in the following years. Analysts say that as of the first half of 2017, Xinfu Shipyard's net profit was 600 million yuan (approximately US$91.7 million), accounting for about one-third of Yangtze River Shipbuilding Group's profit.

Yangtze River Shipbuilding has received continuous orders this year. Recently, Yangtze River Shipbuilding received an order for 2+2 82,000-ton deadweight Kamsarmax bulk carriers from the Greek shipowner Angelakos Hellas, with each ship costing approximately US$24 million. The new ships will be delivered in 2019. As of the first half of the year, Yangtze River Shipbuilding Group has received a total of 19 ships, valued at US$450 million, and currently still ranks first in China's shipbuilding companies in terms of order backlog.

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