Marine stocks listed on the Singapore Exchange have seen significant growth over the past year, and analysts predict further expansion for the sector.
Notable companies like Yangzijiang Shipbuilding saw a nearly 80% increase in share price over the past year, while Marco Polo Marine rose by more than 12%. Seatrium increased by about 52% in the last six months, and Nam Cheong saw a nearly 150% jump in the same period.
Analysts have highlighted several factors contributing to the growth, including an industry upcycle, a supply crunch, and a rebound in global demand. The shipping industry is experiencing an upturn, with high levels of shipping activity and elevated freight rates following the COVID-19 pandemic. As a result, ship liners have strengthened their financial positions, leading to record-high orders for shipyards like Yangzijiang. However, shipyard capacity is limited, with most orders booked through 2028.
Demand for offshore support vessels has also been increasing due to exploration and production activities in the oil and gas industry, although low oil prices and a lack of bank financing have limited the construction of new vessels since 2015. This supply crunch has led to a rebound in vessel charter rates, with some vessel owners seeing more than double the rates since 2021.
The introduction of the International Maritime Organization’s sulfur emissions regulations in 2020 has further increased demand for greener vessels. These regulations require ships to reduce the sulfur content of their fuel to 0.5%, down from 3.5%, in an effort to reduce harmful pollution. Many ship liners have started fleet rejuvenation programs to meet these standards, which has led to higher demand for dual-fuel containerships and eco-friendly gas carriers.
Additionally, analysts have noted a growing demand for liquefied natural gas (LNG) carriers. The limited expansion of shipyard capacity could drive this demand for the next decade, with Singapore shipbuilders positioned to benefit as Korean shipbuilders focus more on large LNG carriers. As demand continues to exceed supply, new build prices have been rising, and shipyards in Korea, Singapore, and China are fully booked until at least 2027.
The demand for floating production storage and offloading (FPSO) units and floating production units has also increased due to rising crude oil prices, which have fluctuated between US$70 and US$90 per barrel since late 2021. This price increase, compared to the range of US$55 per barrel from 2015 to 2020, has boosted capital expenditure plans among oil producers.
Investors are encouraged to focus on shipbuilders in Singapore, Korea, and China as new vessel investments continue to rise. Service companies benefiting from increased vessel deliveries are also expected to perform well. Yangzijiang, in particular, has a strong order book with deliveries scheduled until 2029, and Seatrium has secured contracts worth over S$16 billion for Petrobras P-series FPSO vessels and a TenneT offshore converter platform.
Analysts expect that demand from both the oil and gas industry and offshore wind farms will remain robust, supporting the performance of companies like Marco Polo Marine and CSE Global in the coming years.
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