Investment in newbuildings could rise by 10% this year on the back of robust demand for containerships and LNG vessels, Deutsche Bank forecasts.
Analyst Sanjeev Rana made the prediction as it emerged demand for both box and gas ships has helped push up the number of orders at South Korean yards this year while the rest of the world has seen activity fall.
Between the start of January and the end of May orders at Korean yards climbed by 32%, with more than half made up by containerships and LNG newbuidings, Deutsche Bank says. Globally, orders slipped by 15% over the same timeframe.
Korea’s impressive stats follow a surge in May which saw the country’s newbuilding intake swell by 49%. This was despite a 33% fall in global activity.
Rana said: “Despite orders for bulk and tanker ships being down significantly year-to-date, we expect overall investment in new builds to exceed last year’s $94.6bn by 8-10%, on the back of robust container and LNG ship orders.”
Given the impressive numbers, the analyst says Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries will all exceed their 2011 targets.
In his latest shipbuilding update, Rana explains seasonal weakness will see newbuilding activity fall in the third quarter, opening the door for investors to pick up stock in Seoul-listed yards.
He said: “We expect a slowdown in shipbuilding order flow in 3Q due to seasonal factors, but believe any weakness in share prices would ultimately turn out to be a good buying opportunity in select shares, as order prospects in 4Q11 and 2012, particularly for offshore plants and LNG ships, remain strong.”