HOLT APAC: Shipbuilding Supercycle Through a HOLT Lens

Research evidence excerpt

HOLT APAC: Shipbuilding Supercycle Through a HOLT Lens

Valuation on HOLT MIY remains attractive if forecast CFROI is sustained

As forecast CFROI has continued to trend higher while share price performance YTD has

lagged, sector valuations on HOLT market implied yield are at their most conservative

level since Sep 2024. Current MIY stands at 5.8%, in line with the sector's 10-year

median level. Looking through the last 30 years, sector MIY fell to 3.2% in Oct 2007 and

3.1% in Oct 2025, marking the two richest valuation points for the sector. Relative to

these periods, current valuations appear undemanding if forecast CFROI is sustained.

FigureSource:UBS5: HOLT.HOLTMedianMarketaggregateImpliedof 6 APxJYieldshipbuilders.of APxJ Shipbuilders

Framing market implied sales growth expectations across the sector

Against a backdrop of elevated CFROI levels across the sector, we leverage the Flex

Valuation module in HOLT Lens to assess what is currently priced in. Figure 6 compares

long-term market implied sales CAGR (green dot) with the 5-year median sales growth

(red bars) and near-term IBES sales growth forecasts (grey bars).

This framework assumes IBES consensus sales growth and EBITDA margin estimates are

achieved through 2028. Beyond this period, EBITDA margins are normalized to mid-

(1)

cycle levels over 2029-30, while asset turns are held flat. We then solve for the sales

growth required in 2029-30 to justify current market prices.

On this basis, HD KSOE and YAZG are priced for a fade in sales growth from 2028

consensus forecast levels, while the remaining four companies require accelerating sales

growth to justify current valuations. Market-implied sales growth remains below the 5-

year median growth levels for all companies except China CSSC and Samsung Heavy.