Yangzijiang Financial Holding

Over the past three market days, share buyback pace has slowed relative to previous weeks- past days has been about 13% of trading volume.

Today was another down day, with 17 million shares changing hand. It will be good if YZJFH resumes its ordinary pace of sharebuyback and clock in a 3 million purchase today. However, I am expecting that it will be 2 mil + (<2.5 mil), my view remains that the company is trying to extend the current lifespan of SBB and not need to do another EGM renewal.

Its an undervalued stock still but I think the company is either trying to deploy cash for other investments or it has difficulty in redeeming cash from its china investments and hence is slowing the pace of buybacks

Update: Company has bought 3.28 mil shares today (3mil shares at 0.335 and 280k shares shares at 0.34) which is a good sign. Hopefully it maintains the rate

A discerning pattern can be observed. Today selldown took YZJFH until the 0.325 price level was completely sold down. Something interesting is seen in the share buyback announcement, there was no purchase at the 0.325 mark.

https://links.sgx.com/1.0.0/corporate-an...eddb863726

YZJFH purchase was 3 mil shares at 0.33 and 1 mil shares at 0.335.

Do we see a pattern? Pherhaps- that is the mgmt inserts a 3 mil block of shares to support the next lower price level, at likely blocks of 1 mil share.

Today's rate was a little low at only 13% to the trading volume. Likely due to the number of shares being sold down exceeding the share buyback alogirthim they have in place.

If I were to intrepret it, this means on Monday, there will be a 3 million block of share buyback to support the 0.325 level. If it breaches 0.325 on the same day and moves to 0.32, there will be little or no support.

An observation of the share buyback strategy the mgmt has

https://youtu.be/5KyIDYKDB_0

According to the creator of this video, China is clamping down on emigration and movement of its citizens out of China (PRC).

Investors may be aware that YZJFH has a family office/asset management business in Singapore whose clientile are mainly from PRC, one of the benefits of setting up a family office or giving SGD 2.5 million and above to such investment companies is of the benefit that they can apply for a Singapore PR under the EDB Global Investor Program.

According to the creator of the video, PRCs having a liquid wealth of RMB 10 million (approx SGD 2 million) are being monitored and he provides a few photo evidence. I would not be surprised GEM's business growth wont be as high as presumed because it taps on Mr Ren's connections

Secondly, YZJFH has paused its share buyback for a while. I am anticipating that it is due to a quarterly result update which should be published on Monday, 14 Nov. Let's see if more details such as the fund transfers from China to Singapore progress will be reported.

All in all, I expect YZJFH to move 25% of its assets (approx 1 billion here); after which, the transition to the next milestone of 50% (2 billion) will be slow. I will be happy if YZJFH is able to annually transfer sufficient cash (approx $350-$400 million) to finance its dividends and share buy back program. Not optimistic on the situation in PRC as they are now closing off the movement of people and finances out of the country.

On the topic of emigration, movement of its citizens, flow of money, flow of information, china has been very consistent in this regard.
It only gets stricter. Some areas may get a total ban or make it an almost impossible task.

Many china businesses have their bank accounts locked quite frequently, "for investigation". This maybe due to the transfer agent unknowingly handling cypto trading money transfer or online gambling, etc In most cases when found innocent, money will be unfrozen. Investigation period can vary.

And a complaint can lead to more trouble. Besides, who can you complain to? Police? Or can you give feedback to 4-5 levels administrative divisions? Or maybe write direct to President Xi? Bear in mind during a lock down, you are stuck in a building and unable to even head downstairs for fresh air.

The point I am trying to make it that China is open for business, but not the type of openess we are used to. Which is why I am really glad YZJFH is taking root here and diversifying its portfolio. Sure, there maybe trouble ahead, but doing business in china and or with china, one should expect the unexpected. Which makes valuing china businesses, especially the big/fast growing ones on CCP's radar, extremely difficult.

(12-11-2022, 10:18 PM)Big Toe Wrote:  Which makes valuing china businesses, especially the big/fast growing ones on CCP's radar, extremely difficult.

probably need to factor in the 'common prosperity' push as well .....

JD.com to slash top exec salaries amid China's 'common prosperity' push
https://www.reuters.com/technology/jdcom...022-11-22/
".....The e-commerce giant plans to allocate 10 billion yuan ($1.40 billion) for a fund to assist employees of JD and recently-acquired courier firm Deppon Logistics with buying homes, according to an email to staff signed by JD founder and chairman Richard Liu......Alibaba Group (9988.HK) and Tencent Holdings (0700.HK) last year pledged to spend billions to support the effort....." 

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YZJFH released an announcement today, though shareholders may probably be expecting financial / SBB updates instead :

SGX Listed Yangzijiang Financial Partners Heliconia Capital to Invest in Singapore and Southeast Asian SMEs
https://links.sgx.com/FileOpen/press%20r...eID=739467

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China’s Common Prosperity Program: Causes, Challenges, and Implications
https://asiasociety.org/sites/default/fi...rt_fin.pdf

The announcements the company has made were unrelated to a quarterly update.

In addition, it seems share buybacks has dried up, which underlines my belief that the company had never intended to do ashare buyback seriously. It seems they are only going to do share buyback when share prices falls to all time lows in the 33 cents region. I still expect the 10% mandate to be used up by April 2023.

But it is definite a cancellation of the current 6.6% of share buyback to renew the 10% mandate is out.

This could be due to a secondary factor that China is restricting the movement of cash outwards from China' yes, YZJFH has recently obtained the license through intra group transfers but my sensing is that it is merely a facade. Otherwise, I beleive YZJFH would have been actively using the funds to do share buybacks while maintaining a SGD $1 billion cash kitty as promised. A recap is that the market is pricing the company only at a P/B 0.31, this is really cheap. If the mgmt now headed by a group of ex civil servants know that the accounts/assets are real, buying their own product at 31% of its price would have been done.

The 3Q2022 update has been released - lower YoY total income, increase in NPL, etc and also a FAQ at the end. I think the FAQ along with quarterly updates is a good practice; as OPMI, my wish wld be for such practices to be made compulsory for listed companies.

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3Q2022 VOLUNTARY UPDATE AND FREQUENTLY ASKED QUESTIONS
https://links.sgx.com/FileOpen/Yangzijia...eID=740774

Thanks Dreamybear, it was quite late for their quarterly update. Hopefully, this means a restart of their SSB as there will be price pressure going forth

NPL has increased significantly and it highlights how the property segment in China is in tatters. I would like to see how YZJFH concludes its property debt instruments. It has access to collaterals and rightfully should force sell them to reclaim lost capital. However, I'm not sure how they will wind it up or politically will there be interference. The debt is s$777.5 million or RMB$4 Billion. We know they hold 200% as collateral, this means they have RMB$8 billion of land to sell.

In the China Evergrande liqudation, we have seen the company selling off land at only 55%-90% of its book value. So i presume YZJFH should just about be able to recover its capital without any returns/interest on its investments

Hi CY09,

Normally, if borrowers defaulted, the mortgaged properties in relation to the defaulted loans will be auctioned off to achieve the best possible price. Force selling is not encouraged as you might achieve a lower price.

Don't be too optimistic about China's property related problems now at crisis level, and also on the recovery of NPLs related to property lending. Based on past experiences in Europe and U.S.A., a serious property crisis could bring down banks even.