Will inclusion in the government’s White List boost Yangzijiang Shipbuilding’s sales?

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Inclusion in the Government's White List May Not Directly Boost Yangzijiang Shipbuilding's Sales

While Yangzijiang Shipbuilding (Holdings) Ltd has been included in the Chinese government's White List of shipyards, it remains unclear if this designation offers a tangible advantage that directly boosts sales. The list, which comprises companies with dominant market positions and accounts for 72% of total vessel deliveries in China year-to-date, includes 51 shipyards. Jiangsu New Yangzi Shipbuilding Co, Ltd, a subsidiary of Yangzijiang, was ranked second on this list.
Lack of Verifiable Tangible Advantage

The direct benefits of being placed on the government's White List are not immediately clear or verifiable. The intention behind the list was to highlight key players in the shipbuilding industry, but the specific advantages conferred upon companies like Yangzijiang over the other 49 shipyards on the list are not explicitly defined. This ambiguity makes it difficult to ascertain if the inclusion translates into increased sales or a competitive edge in securing new orders.
Strong Order Book Amidst Industry Challenges

Despite the uncertainty surrounding the White List's impact, Yangzijiang Shipbuilding maintains a robust order total of US$4.6 billion. This strong financial position, coupled with the company's focus on returning to its core shipbuilding business by reducing non-shipbuilding operations, has garnered positive analyst sentiment. However, the broader shipbuilding industry in China faces challenges, with new ship prices expected to remain subdued, according to the China Association of The National Shipbuilding Industry (CANSI).
Potential Competition and Restructuring

The White List includes competitors such as the heavily indebted China Rongsheng Heavy Industries Group Holdings Ltd. China Rongsheng is undergoing restructuring, with its Jiangsu shipyard expected to complete this process by June 2015. This period of restructuring for a major competitor could potentially offer a temporary edge to Yangzijiang's New Yangzi Shipbuilding Co, Ltd shipyard. However, it is a key question whether this advantage is sufficient to significantly alter the market landscape, especially given Yangzijiang's existing substantial order book.

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Will inclusion in the government’s White List boost Yangzijiang Shipbuilding’s sales?

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