Guangdong Songfa Ceramics Co (603268.SS): Materially upgrading earnings and TP on phase IV capacity expansion; Buy

Goldman Sachs reiterates Buy on Songfa Ceramics (603268.SS), whose primary asset is Hengli Heavy Industry, and raises its 12-month target price by 50% to Rmb300/share (40% upside), keeping it its top pick within shipbuilding coverage. Hengli has ramped to 6% global capacity market share after its Phase III drydock started operation in Jun-26. Phase III slipways and Phase IV drydocks are guided to start operation by end-2026 and early-2027 respectively, adding about 97% capacity to c.7.6mn CGTs and lifting global capacity share to 11% by end-2027E. Orderbook cover years are then expected to fall to 2.0x, the lowest versus global/China averages of 3.6x/3.9x, leaving more slots to capture new orders. On stronger high-value ship mix and marine engines (capacity enlarged from 180 to 300 units p.a.), it raises 2026-28E net income forecasts by 9%-80% to Rmb10.3/22.6/30.6bn, with net margin reaching 22% in 2028E. The TP is based on a target 10x 2028E P/E. Catalysts: continued new order wins an