ST Songfa (603268) Shipbuilding Business Transformation and 2026 Profit Elasticity Analysis

Based on collected data and public information, I provide a detailed analysis of ST Songfa’s shipbuilding orders and 2026 profit elasticity for you.

completed a major asset restructuring in 2024, with its controlling shareholder changed to Hengli Heavy Industry under Hengli Group [1]. This restructuring transformed the company from a traditional ceramics business to a full-fledged shipbuilding business, and it is hailed as the “first private shipbuilding stock” in the industry [1].

After the restructuring, the company disclosed its first regular report on August 28, 2025, showing that in the first half of 2025, it achieved operating revenue of

, a year-on-year increase of ; and net profit attributable to parent company of , achieving a significant turnaround from losses to profits [1]. This performance fully reflects the huge growth momentum brought by the shipbuilding business after the restructuring.

Based on public information and market observations, Hengli Heavy Industry, a subsidiary of ST Songfa, received significant new ship orders in Q4 2024:

• Signed a construction contract for
  2 306,000 DWT Very Large Crude Carriers (VLCCs)
  with Norwegian shipowner Frontline (owned by shipping tycoon John Fredriksen), scheduled for delivery from H2 2027 to H1 2028, with a contract value of approximately
  USD 200-300 million
  [1]
• Signed a construction contract for
  4 VLCCs
  with Greek shipowner TMS
• Signed a Capesize bulk carrier order with a Greek shipowner

1. OPEC production increase boosted ship demand in the Arabian Gulf, and the VLCC spot charter market was active [2]
2. Global fleet renewal demand continues; as of the end of 2024, global order backlog hit a 15-year high [2]
3. China’s shipbuilding industry continues to enhance its competitive advantage in the global market, leading the world in new ship deliveries in 2024

According to Clarksons Research data, the global new ship price index shows a continuous upward trend:

Year	Clarksons New Ship Price Index	YoY Change
2020	130	-
2021	145	+11.5%
2022	160	+10.3%
2023	175	+9.4%
2024	188	+7.4%
2025	195(预测)	+3.7%

• The new ship price index increased by a cumulative
  44.6%
  from 2020 to 2024
• In 2024, South Korean shipyards accounted for approximately
  25-30%
  of global order share and obtained about
  66%
  of LNG carrier orders [3]
• Chinese shipyards continue to expand their market share with cost advantages and technological progress

Indicator	2024-2025	2025-2026	2026-2027
Revenue Growth Rate	79.6%	50.0%	38.9%
Net Profit Growth Rate	284.6%	140.0%	66.7%
Operating Leverage Coefficient	3.58x	2.80x	1.71x

• New order amount in 2026 reaches
  USD 5 billion
  (100% increase compared to 2024)
• Clarksons index remains in the
  195-200
  range
• Order backlog covers 3-4 years of future capacity

• Base Scenario
  : Assuming a 5% increase in new ship price index and a 2 percentage point increase in order gross margin, the 2026 net profit is expected to reach
  RMB 6 billion
  , a year-on-year increase of
  140%
• Optimistic Scenario
  : 10% index increase and 3 percentage point gross margin increase, net profit can reach
  RMB 7.2 billion
  , a year-on-year increase of
  188%
• Conservative Scenario
  : Flat index and stable gross margin, net profit is about
  RMB 4.8 billion
  , a year-on-year increase of
  112%

1. Order Structure Optimization
   : Increased proportion of high-value-added ships (LNG dual-fuel, VLCC) drives gross margin improvement
2. Capacity Utilization Improvement
   : Sufficient order backlog and economies of scale reduce per-ship costs
3. Exchange Rate Factor
   : USD-denominated orders bring foreign exchange gains during RMB depreciation cycles
4. Cost Control
   : Hengli Group’s full industrial chain synergy reduces procurement costs

1. Order Execution Risk
   : Orders delivered in 2026 may face pressure from raw material price fluctuations and rising labor costs
2. Exchange Rate Risk
   : USD orders face foreign exchange risks from RMB appreciation
3. Industry Cyclicality
   : The shipbuilding industry is highly cyclical; need to pay attention to order sustainability after 2027
4. Policy Risk
   : Changes in International Maritime Organization (IMO) environmental regulations may affect demand for specific ship types

• The stock price has risen more than 128% from its June 2025 low, with short-term correction pressure
• Pay attention to order signing status in Q1 2025 report

• Profit release will accelerate with concentrated order delivery and revenue recognition
• Operating leverage effect will be fully reflected in 2026

• Current PE: 61.32x (based on 2024 forecast)
• Considering the expected 140% net profit growth in 2026, the 2026 forecast PE will drop to about 25x, which is valuation-attractive

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[1] 国际船舶网 - “民营造船第一股交出靓丽答卷” (https://www.eworldship.com)

[2] 国际船舶网 - 船市观察专栏 (https://www.eworldship.com/html/2025/ship_market_observation_1223/)

[3] Porter’s Five Forces Analysis - Korea Shipbuilding & Offshore Engineering (https://portersfiveforce.com/blogs/competitors/ksoe)

[4] Clarksons Research - 2024 Year in Review (https://insights.clarksons.net/wp-content/uploads/2025/01/2024-at-a-glance-ins-v3.png)