JES to focus on building 'a few models' of commercial ships

Patrick Kan, executive director and cfo of JES, pointed out that the company has diversified into the offshore shipbuilding sector over the past one year, and its latest venture is to invest in Singapore-based Mineriver, owner and operator of mineral reserves.

“Commercial vessels have been our traditional products. We will continue our diversification into new products such as offshore support vessels (OSVs) and other specialised vessels,” Kan told Seatrade Global.

“Meanwhile for dry bulk carriers, containerships and oil tankers, we will focus on a few selected models to do mass production. By focusing on specific models, we can be more competitive,” he said, adding that the yard would only accept new orders of at least post-panamax sizes.

Last year November, JES entered into an agreement to acquire up to 30% in the share capital of Mineriver for SGD127m ($100.2m). The shipbuilder cited this investment to be part of the group's diversification strategy to secure a different source of long term and sustainable earnings and cash flow streams.

Kan said JES hopes to see the commercial benefit of the mineral exploration and the potential listing of Mineriver to reflect the value of the investment.

At present, JES has an orderbook worth slightly more than RMB1bn ($165.4m), mostly comprising of bulkers. The yard is also seeing an increasing number of orders for the higher value platform supply vessels (PSVs), according to Kan.

“Right now the offshore sector remains very profitable. There is a rig replacement cycle going on and offshore exploration is going into deeper waters,” he said.

Kan recalled that in the past few years, shipbuilders in China have suffered a severe drop in business due to the sluggish global shipping market that led to low newbuilding orders and prices. The local banks have also held back their support for the shipyards, he added.

“But the shipbuilding industry seems to be turning around with the BDI rising over the past few months and more enquiries on shipbuilding. Hopefully the worse period of the market is over,” Kan said.

Meanwhile, Singapore-listed JES had recorded a third quarter net loss of RMB133.09m as against a profit of RMB11.73m in the previous corresponding period. It attributed the poor results to lower newbuilding prices and slowing down of yard production.

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