The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that maintaining China Shipbuilding Defense's (00317) “buy” rating, the bank maintained the 2026-2028 net profit forecast of 20/26/4.5 billion yuan, respectively, with corresponding PE being 9/7/4 times; China Shipbuilding Defense's abundant on-hand orders and yearly increasing production schedule scale supported the improvement of mid-term performance, and high-price order delivery combined batch construction opened up long-term profit margin space. China Shipbuilding Defense announced a pre-increase in results for the first three quarters of 2026. It is expected that 26Q1-3 will achieve net profit of 11-1.25 billion yuan, corresponding to 26Q3 net profit of 2.63 to 413 million yuan, an increase of 105% to 221% over the previous year, in line with expectations.
Shen Wan Hongyuan's main views are as follows:
New shipbuilding prices continue to rise, and high-quality production capacity continues to be scarce
New shipbuilding prices and used ship prices rebounded sequentially for 6 and 20 months respectively. The renewal of old ships supported demand for new ships, global handheld orders continued to accumulate, and shipyard schedules were full. High-end ship construction requires professional technical teams, mature supporting systems, and stable contract performance capabilities, and even after new facilities are put into operation, they still need to experience a rise in efficiency. High-quality production capacity is difficult to expand in the short term. Leading shipyards have strong bargaining power, and there is plenty of upward momentum in ship prices.
Handy order reserves are abundant, and high-value-added orders are gradually being implemented
By the end of September, China's shipbuilding defense civil vessels had orders of about 10.8 billion US dollars, and the 2026-2028 civil ship delivery volume (CGT, revised gross tonnage caliber) is expected to increase 11%, 24%, and 44% year-on-year. Orders for 26Q3 regional container ships, oil tankers, chemical tankers, and car carriers continued to land. Adequate order reserves and medium- to long-term production schedule growth provide a foundation for subsequent profit release.
Branch line box ships have outstanding advantages, and batch construction opens up medium- to long-term profit margin space
Branch ships benefit from supply chain regionalization, offshore route encryption, and fleet renewal requirements, and continue to be booming. Huangpu Wenchong has formed the “Honghu” brand series of ships, and has a leading edge in the field of 3-6,000 TEU box ships. Orders for the same series of ships continue to accumulate, and repeated investment can be reduced through design reuse, centralized procurement, and standardized construction, production organization can be optimized, and construction cycles shortened. With the accumulation of batch construction experience and the deepening of lean management, unit costs are expected to drop, driving up the medium- to long-term profit margin center.
Focus on the Group's commitment to resolve competition in the industry
Huangpu Wenchong competes with Chinese ships in the same industry. China Shipbuilding Group issued a commitment in January 2025. It plans to propose to the China Shipbuilding Defense Board to advance the resolution through asset restructuring, share replacement or transfer, entrustment management, and business adjustments within five years from the date of issuance of the promise, and carry out corresponding decision-making procedures. The follow-up focus will be on specific integration plans and their impact on shareholders' rights and interests of listed companies.
Risk warning: New orders received by civilian ships fell short of expectations, orders for non-civilian products declined, shipping sentiment declined, steel prices rose sharply and RMB appreciated sharply, and order delivery fell short of expectations.