YANGZIJIANG SHIPBUILDING: US scales back port fees, DBS Research reiterates high stock target price

THE CONTEXT

• Yangzijiang Shipbuilding was cruising along, racking up huge orders in recent years and looking unstoppable.

Then, out of nowhere in February 2025, the US dropped a bombshell—talking about slapping massive fees on Chinese-built ships docking at American ports.

That news sent the Singapore-listed stock into a nosedive by ~40%.

chart4.25

• Why all the drama? The US wants to revive its own struggling shipbuilding scene, while China’s been increasingly dominating the global market.

With China’s state support and sharp pricing, the US started worrying about security, supply chains, and its own industry’s future.

• Lately, though, the US has had to dial down the tough talk -- just as it has done on several other fronts.

The US has decided on much lower port fees than first threatened, easing the panic among ship owners, etc, and making it less likely that orders at Chinese yards will get canceled.

• Post-news, DBS Research issued a report (excerpts below) which has a target price for Yangzijiang's stock that far exceeds the previous high ($3.32) before the US bombshell ...

Excerpts from DBS Research report
Analyst: Ho Pei Hwa

USTR's scaled-back port fees proposal eases concerns

US Trade Representative scales back port fee plan, with new proposed tonnage-based per voyage structure at much lower rates
Eases concerns on order cancellation or future ordering at Chinese shipyards; Korea/Japan shipyards stand to benefit with preference over Chinese-built. Though, other factors such as delivery slot availability, price premium etc will remain in play
Expect further consolidation amongst Chinese shipbuilders with higher order concentration at top yards like Yangzijiang
Yangzijiang has wide economic moat to weather through near-term uncertainties and potential structural shift; reiterate BUY and TP SGD3.80

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What has happened

The U.S. Trade Representative (USTR) has significantly scaled back initial proposals on hefty port fees targeting Chinese operators and Chinese built vessels, after industry backlash.

Effective Oct 14, 2025 (after a 180-day waiver), fees will apply once per voyage (not per port call; an Asia-US vessel typically makes three port calls per voyage) and are capped at five charges annually per vessel (a vessel could make 6-8 round trips on Asia-US routes).

In terms of fees structure, vessel operators of Chinese-built ships will be charged USD18/net ton for arriving vessels (increasing to USD33 by Apr 17, 2028) or for containerships at USD120/container discharged (rising to USD250 by 2028).

For Chinese operators, their vessels will be charged at higher fees of USD50/net ton (rising to USD140 by 2028).

(More details in DBS report)

Our view

Based on our estimate, the impact on large containerships is expected to be much less severe, with the port fees now projected to represent 5-6% of freight rates (rising above 10% by 2028), compared to the previously estimated 20-30% increase.

Yangzijiang
Share price: $2.17	Target: $3.80

These more manageable port fees and more room for shipping companies / shipbuilders to manoeuvre should ease concerns about Chinese shipbuilding order cancellations and future ordering.

Korean and Japanese yards are expected to somewhat benefit from a preference for non-Chinese-built vessels and modest price premiums.

We expect the trend to impact tier two yards in China, driving further consolidation of Chinese shipbuilding industry with higher order concentration at top yards.

Ordering for top tier Chinese shipbuilders should be more resilient.

After all, China accounts for half of global shipbuilding capacity.

record order2024

Shipwoners typically also take other factors such as slot availability, newbuild prices etc into consideration while placing orders, especially that port fees are likely to pass on to consumer.

Furthermore, the success of building cost competitive ships in US remains to be seen.

While Korea yards have already approached US for potential collaboration to accelerate US shipbuilding revival, this is a long-term process that will take 5-10 years to develop, at least.

Ho Pei Hwa, analystWhile broad market is volatile with ongoing US-China trade war, we opine that Yangzijiang’s 30% selloff on port fee news is excessive.

As the world 3rd largest shipbuilder by orderbook and amongst the most profitable shipbuilders, Yangzijiang has wide economic moat and strong balance sheet to weather through near-term uncertainties and potential structural shift.

Reiterate our BUY call with SGD3.80 TP (2.5x PB; 11x PE).

YANGZIJIANG SHIPBUILDING: US scales back port fees, DBS Research reiterates high stock target price

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