CHINA/HK FIRST TO MARKET

Research evidence excerpt

CHINA/HK FIRST TO MARKET

Asia Pacific Equity Research

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China/HK First to Market 10 July 2026

Top Stories

Init | | China Shipbuilding, China (Beatrice Lam)

Multi-year earnings visibility; initiate on Songfa and CSSC at OW; assume coverage of YZJ at N

We recommend selectively increasing exposure to China’s shipbuilding sector through Guangdong Songfa

Ceramics (“Songfa”; TP: Rmb210) and China CSSC Holdings (“CSSC”; TP: Rmb45). We initiate coverage

on both at Overweight. We also assume coverage of Yangzijiang Shipbuilding (“YZJ”; TP: S$3.4) at Neutral.

We believe the market is underestimating the sector’s long-term earnings power, because: 1) existing

orderbooks provide multi-year earnings visibility, with Chinese shipyards filling 2029-30 delivery slots; 2)

industry fundamentals remain tighter than previous cycles, with scheduled deliveries expected to increase

c.37% during 2025-27 against only c.9% global dock capacity growth during 2025-29; 3) signing

downpayments have increased from around 10% historically to 15-40% today, highlighting a persistent

seller’s market; and, 4) demand is rotating across vessel classes while IMO delays defer rather than destroy

replacement demand. We prefer Songfa > CSSC > YZJ, reflecting the number of incremental earnings

drivers rather than the current franchise quality.

China AI chip fabless (Billy Feng)

Supply-demand gap catalyzes substitution, training market is the next frontier

Upbeat demand to propel product pipeline.