Bank of America-Merrill Lynch said that it sees Yangzijiang Shipbuilding Ltd. benefiting from potential orders after a revival of interest from container shipping firms in larger vessels.
The broker’s outlook came after reports that Taiwan's Evergreen, the world's sixth-largest container shipping firm, ordered 10 vessels with a capacity of 13,800 twenty-foot containers (TEU) each.
"Evergreen Marine decided to lease ten 13,800-TEU container ships from Korea Infrastructure Investments Asset Management Co (KIIMA). KIIMA will place new build orders with Hyundai Heavy," the broker said in a report. "We expect the other shipping companies to protect their market shares, and more mega-container ship orders are likely to be given to yards like Yangzijiang from mid-2012."
Merrill has a buy rating on Yangzijiang's stock with a target price of S$2.12.
Last year, the world's largest container shipping company, Maersk Line, ordered 10 18,000 TEU ships and later exercised the option for another 10, sparking others like Singapore's Neptune Orient Lines Ltd to increase their fleet (Reuters).