Shenwan Hongyuan's latest research report highlights that secondhand ship prices have stabilized and exceeded their 2024 pre-downturn highs by 2025, with the secondhand ship price index crossing above the newbuild price index in September 2025. Historically, since 2000, this phenomenon has occurred four times—three of which preceded supercycle rallies.

The report notes that aging tankers are due for retirement, potentially revitalizing shipbuilding demand. Unlike previous currency-driven fluctuations, the recent 0.15% weekly rise in newbuild tanker prices reflects a tangible spillover of shipping sector strength into shipbuilding. Key observations include:

1. **Historical Patterns**: - In 2021, container shipping’s recovery triggered a 4-month-lagged rally in shipbuilding stocks like COMEC (00317). - The 2022 tanker boom, driven by the Russia-Ukraine conflict, similarly saw shipbuilding equities rise after a 4-month delay. - By 2024, Red Sea rerouting synchronized container shipping and shipbuilding gains.

2. **Diverging Indices**: After peaking in late 2024, secondhand ship prices rebounded faster than newbuild prices in 2025. The September 2025 crossover historically signals supercycle potential.

3. **Tanker Market Dynamics**: Despite August 2025’s rising tanker rates and bullish sentiment, shipbuilders initially lagged due to weak order momentum and skepticism about rate sustainability. However, strong supply constraints and sanctioned trade shifts (e.g., Iran-Russia) support prolonged high rates, with retiring fleets likely to boost new orders.

4. **Valuation Opportunity**: COMEC (00317) and other shipbuilders trade at historically low multiples (0.65x and 0.36x order-to-market-cap ratios), with $56B and $7B order backlogs respectively. Stocks like ST Songfa (603268.SH) and Yangzijiang warrant attention.

**Risks**: Slower-than-expected new orders, lax carbon policies, shipping downturns, steel price volatility, RMB appreciation, and Southeast Asian competition.