Shares of Yangzijiang Shipbuilding dived around 16 per cent on Thursday (Feb 27) morning, a day after it posted earnings and in a week when the US proposed to slap fees on Chinese-built vessels entering US ports.
Just past 10 am, the shares of the Singapore-listed maritime vessel maker plummeted to roughly S$2.28, building from already-heavy losses incurred earlier in the week. That heavy selling wiped S$1.5 billion off its valuation.
Its shares were at S$3.30 a week earlier.
On Feb 21, the US Trade Representative (USTR) office proposed to hit Chinese-built vessels entering US ports with fees of up to US$1.5 million, as part of investigations into China’s rising dominance in the global shipbuilding, maritime and logistics sectors.
The probe’s findings, published in January, were that China’s global shipbuilding tonnage share rose significantly over 1999 to 2023 from 5 per cent to 50 per cent due to hefty state subsidies and preferential treatment for state-owned businesses that are hurting international competitors, Reuters reported.
It is proposing port entrance fees of up to US$1 million per vessel owned by Chinese maritime transport operators, or alternatively, a charge of US$1,000 per net tonne of a vessel’s cargo capacity.
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On Wednesday, Yangzijiang reported a net profit of 3.6 billion yuan (S$659.3 million) for the second half ended Dec 31, 2024, which is 50.5 per cent higher than the 2.4 billion yuan recorded in the corresponding period a year earlier.
For the full year, it reported a net profit of 6.6 billion yuan, a 61.7 per cent increase from 4.1 billion yuan in the 2023 financial year.
DBS in a note on Thursday said that the sell-off on the news on US port charges was overdone.
“USTR proposes to impose port fees for Chinese-built vessels that enter US ports for every port calls last Friday, sending Yangzijiang’s share prices on downward spiral,” it said.
“Subsequent broker downgrades exacerbated the sell-off. We believe the knee-jerk reactions are overblown,” it said.
This is developing news. Please check back for more.
