UBS China Industrials: Shipping Supply Chain and Going Global
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
UBS turns positive on China's shipping supply chain within the industrials sector, citing robust VLCC rates and strong shipbuilding orders alongside the continuing globalization trend of Chinese companies. The report covers multiple sub-sectors, including shipping, shipbuilding, container manufacturing, ports, toll roads, rail, construction machinery, and automation.
In shipping, VLCC TCE has reached 1.8 times pre-conflict levels, with one-year time charter rates exceeding $110,000 per day, a historical high. For the first two months of 2026, global new shipbuilding orders surged 101% year-over-year, with tanker orders skyrocketing 1,000%, primarily driven by VLCC demand. Five-year secondhand VLCC prices have surpassed newbuild prices, indicating a notable divergence. Geopolitical risks and sanctions constraining the shadow fleet continue to support freight rates.
Regarding China's exports, 2025 export value grew 6% year-over-year, with significant gains in shipments to Africa and ASEAN, partially offsetting a 12% decline in exports to the US. Overseas revenue exposure among A-share listed companies continues to rise, reaching 15.0% in the first half of 2025.
Key Buy-rated stocks include Yangzijiang Shipbuilding (target price SGD 5.10), China State Shipbuilding (target price RMB 45.80), and CIMC (target price RMB 14.00). UBS maintains Neutral ratings on COSCO Shipping Holdings and several port operators.