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Latest Report

Maritime alpha generator

• Core earnings in line FY26F earnings forecast lowered by 8% on slower vessel sales due to timing
• Newbuild orderbook grew to 76 vessels totaling > USD4bn balance sheet remains unleveraged, leaving room for further fleet growth
• Delivery of 7 newbuild vessels in 2H26 and ~16 in FY27 to drive growth sale contracts secured for 12 vessels worth USD500mn, of which, 2/7/3 vessels to be delivered and recognised in 2H26-2028
• Reiterate BUY TP of SGD0.88 stock offers decent 3-4% yield

Earnings upcycle ahead 

Core performance broadly in line.YZJ Maritime&rsquo s 1H26 reported net profit fell 29% y/y to USD44.9mn due largely to forex swing for the legacy financial assets. Excluding forex impact (-USD5.6mn in 1H26 vs +USD16.1mn in 1H25), core profit inched up slightly, +7% to USD50.5mn, boosted by higher financial asset fair value gain (+USD12.2mn vs expectation of +USD5mn) and other income (+USD4.7mn largely due to one-off legal settlement gain, and some government rebates & GST remission). 

This was partially offset by 52% y/y decline in JV/associate profit contribution to USD7.0mn in the absence of major vessel sale gains.

Total income rose 49% y/y to USD81.6mn, with the core Maritime Business segment contributing two-thirds of it. Income from maritime fund assets climbed 64% y/y to USD50.0mn, driven by charter income of USD23.8mn (+77% y/y) and finance lease interest of USD21.4mn (+39% y/y) as the fund' s vessel portfolio expanded. The group secured leasing agreements for 13 vessels (USD89.8mn contract value), ordered 8 VLCC newbuilds, sold 4 new MR tankers and 4 newbuild bulk carriers, taking the fleet to > 120 vessels including 76 newbuilds under construction. Maritime operating cost outpaced income growth, rising 186% y/y to USD26.9mn, on higher voyage costs, transit fees, startup expenses and a change in chartering strategy (from timecharter to voyage resulting in higher operating cost).

Fleet expansion and newbuild deliveries to drive sequential growth. We see earnings trajectory to be back-loaded this year, with 7 deliveries expected n 2H26 (2 vessels in 1H26 on charter), of which two have secured sales contracts. The USD500mn of vessel sale contracts signed, spanning 12 newbuild vessels with deliveries through 2028 (2/7/3 vessels for 2H26-2028), provide a visible runway for capital gains recognition across FY26-28, and management' s stated strategy of locking in sale contracts early while vessels are still under construction is a repeatable model that reduces execution risk relative to spot-market resale.

The structural backdrop remains constructive, with IMO decarbonisation requirements and geopolitical rerouting supporting demand fornewer, more fuel-efficient tonnage, both of which play to YZJ Maritime' s asset-light, discounted-shipyard-access model (targeting vessel build costs up to 20% below prevailing first-tier market prices). On capital management, the unleveraged, net-cash balance sheet (USD238mn cash, zero borrowings) gives the group optionality to layer in leverage, bank borrowings, or asset-backed loans, to lift targeted project IRRs from the 10-15% unleveraged range toward the 20-30% leveraged range, and the June 2026 share buybacks signal management' s confidence that the share price does not yet reflect intrinsic NAV. Key swing factors for the next 12 months are the pace and pricing of newbuild deliveries, the durability of charter rates across tanker, gas carrier and bulker segments, any of which could move reported earnings materially.

Earnings revisions. We have lowered our FY26F net profit (ex-forex) by 8%, factoring in slower vessel sales. We expect the group to divest another 3 vessels in 2H26, bringing total vessel sales to 5 units for 2026. We are leaving our FY27 forecasts intact, supported by 7 confirmed vessel sales.

Newsflow on vessel sales should be a key catalyst, supporting earnings growth visibility of over 30% from 2H26 onward ahead of the 2H26 results. We believe the current price weakness, driven by market disappointment over the slower pace of vessel sales, represents an attractive entry point given the deliberate rather than structural nature of the sales deferral, alongside a constructive tanker demand thesis underpinned by the renewal cycle, AI-driven demand and geopolitical disruption.

Key takeaways from briefing: 

Higher operating costs hit by startup cost for new vessels, management clarified that the elevated maritime operating cost reflects one-off deployment and start-up costs of USD0.8-1.0mn per new vessel entering the fleet (3 additions in 1H26 2 vessels off-hire for overhaul). Management sounded more constructive on spot voyage charter in view of the freight rates uptrend.

9/16/24 vessel deliveries in 2026/2027/2028. Two 18.5k dwt tankers were delivered in 1H26 and entered chartering fleet while two MR tankers were delivered in Jul-2026. 5 more vessels are scheduled to deliver by year end, taking full year deliveries to 9 vessels. Looking into 2027, group expects 16 vessel deliveries, a further 24 units in 2028, and 27 units in 2029 and beyond. This bodes well for 20-30% earnings growth ahead.

Newbuild pipeline and strategy. Management updated that the newbuild orderbook has grown to 76 vessels totaling over USD4bn to-date, with about 90% to be delivered before 2030 (exceptions being 2 VLCCs and 2 LR2s slated for 2031). Each vessel is expected to generate USD6-10mn profit (15-25% margin) plus roughly USD2mn newbuild margin, depending on selling price, based on our ballpark estimates. Management reassured investors on the buoyant resale market. The deferral of vessel sales, only 2 in 2H26, 7 in 2027 and 3 in 2028, was a deliberate strategic move to capture the tanker price uptrend rather than a reflection of weak demand. Vessels are mostly jointly owned with shipowner partners, with YZJ Maritime typically holding a 80-85% stake, and partners such as Scorpio has the capability to operate the vessels and can guarantee a minimum return (~8%) in weak freight environments. 

Shipbuilding upcycle has legs to run. Management sees the cycle peaking around 2030, potentially extending as far as 2036, given constrained yard and engine capacity, with slots already stretching into 2029-2030. On VLCC oversupply concerns, management pointed to the 12.5% stake given to Scorpio as a risk-sharing mechanism, noting YZJ Maritime retains at least a 5% cost advantage even building the vessels at tier 1 yards. Longer-term, management floated a target of around 100 newbuilds. On FX, RMB appreciation from 7.2 to 6.75 against the USD has compressed the build cost advantage from around 20% to 15%, though this has been partly offset by rising newbuild prices market-wide further USD depreciation remains a key risk to newbuild margins given construction is based in China yards.

Cost advantage of YZJ Maritime vessels. The MR and LR tankers ordered by YZJ Maritime carry a 15-20% cost advantage versus peers, providing a buffer for resale and chartering economics. We understand of the 12 vessels, the first batch of 4 MR tankers achieved 15-17% margin at ~USD45mn per vessel (50% stake), the second batch of 4 MR achieved 25-27% margin at ~USD48mn per vessel (85% stake), and hopefully > 30% for upcoming tanker sales, while another 4 units of 40k dwt vessels are running at 20-23% margin.

 

 

 

 

 

 

Executive Chairman and CEO of Yangzijiang Maritime, Mr. Ren Yuanlin said, &ldquo Together with our vessel monetisation strategy, leasing is another important pillar of our business model, enabling us to optimise the utilisation of our existing fleet of maritime assets while providing a stable and recurring income base.

 

We remain focused on structuring our financing deals with contracted and predictable cash flows, enabling us to generate stable and sustainable returns. By combining recurring lease income with disciplined capital deployment and proactive asset monetisation, we seek to optimise the value of our trade receivables and maritime assets while strengthening the resilience of our asset-light and capital-efficient business models.

 

As the backbone of global trade, the maritime industry remains an indispensable cornerstone and core strategic foundation of global economic development, underpinned by resilient demand and structural importance.

 

Against this backdrop, our asset-light business model aims to generate resilient, multi-source returns across different stages of the maritime cycle.

 

With a robust and growing fleet of more than 120 vessels including newbuilding orders, Yangzijiang Maritime is well-positioned to take advantage of the evolving opportunities from the global maritime industry.&rdquo  

YZJ Maritime_Press Release_Financing_Aug2026_13Aug final version.pdf