Yangzijiang Financial Holding

[BlueKelah]

Hopefully the ID's actions are due to him seeing YZJFH has moved a significant amount of capital from China to Singapore.

The rumour mills are still circulating that China is in a bad shape and YZJFH is struggling to redeem its china investments and shifting the money to SGD. Time will only tell who is right. I would appreciate if YZJFH provides an interim update in November 2022 on the status of its fund transfers, hopefully with close to SGD 900 million of the required SGD 1.1 billion transferred to Singapore

What is important to me is seeing a SGD 1.1 billion of cash + investment portfoilo in Singapore in Feb 2023 slides to fund the declared dividends, spent an additional SGD 150-170 million to purchase 10% of shares as part of the share buyback mandate and renewing it. If it dosent happen, next year's AGM, which likely is a physical event, will be a good show to watch.

I am starting to sound like a broken recorder repeating the same thing*

At the end of the day its a mega-SCHIP. No matter whats on the balance sheet they are just paper numbers.

China is definitely getting in a worse shape now as FED funds go up and up and up causing offshore credit markets to tighten even more. You can see that only the USD is going up, other major currencies are all going down. Since the mortgage payment strikes not much news coming out of china except for reports of covid lockdowns. 

IMO YZJ has partition off their junk loans portfolio and used the SGX to relist. Should something really bad happen to the property sector, i wont be surprised if YZJF has to do some massive write downs. They may be forced to use up the cash as well to plug any leaking boats.

[CY09]

YZJFH claims that its loans are secured by about two times the loan amount in collaterised value (LTV ratio 200%)

I caveat that these are claims and we will not know in times of default if it will happen; would YZJFH be able to seize the security, force sell it such that collected revenue- foreclosure expenses = loan amount.

This is China hence we do not know (i) politically will Xi JinPing allow normal acts of foreclosure to occur resulting in a massive sell down of property value and (ii) during times of foreclosure are the collaterised value even worth 50% of their valuation. Part (ii) is a normal business risk which even Singapore businesses/banks face, which is why LTV ratio is set at 140%

Rationale for an Early Conversion of RMB maturing assets to Singapore

Due to the constant depreciation of RMB against SGD & USD, it is better that YZJFH quickly converts RMB assets to SGD/USD. The longer it takes, the worse the exchange rate will be as Singapore i/r is increasing while China's i/r is falling. Logically, as the investment ops officer, I would have converted most of my promised SGD 1.1 billion committement now. Of course, if redemption has been delayed in China, YZJFH will be put in an unfavourable position and is likely to incur a large forex loss. Yuan has depreciated about 5% against SGD and 11% against the USD, USD is the preferred currency by YZJFH to hold in Singapore.

The alternative is for YZJFH to regenade on its promised shifting of investments into Singapore and say due to the unfavourable exchange rate, it has put its plans on ice and will continue to invest in China. Not palatable but is a possible move if it indeed is having difficulty in redeeming China maturing investments

Share Buyback Action

On side note, I notice YZJFH has been doing share buybacks of about 25% of the daily traded volume each day. Wonder how long will this persist and will they ever change this ratio

[BlueKelah]

YZJFH claims that its loans are secured by about two times the loan amount in collaterised value (LTV ratio 200%)

I caveat that these are claims and we will not know in times of default if it will happen; would YZJFH be able to seize the security, force sell it such that collected revenue- foreclosure expenses = loan amount.

This is China hence we do not know (i) politically will Xi JinPing allow normal acts of foreclosure to occur resulting in a massive sell down of property value and (ii) during times of foreclosure are the collaterised value even worth 50% of their valuation. Part (ii) is a normal business risk which even Singapore businesses/banks face, which is why LTV ratio is set at 140%

Rationale for an Early Conversion of RMB maturing assets to Singapore

Due to the constant depreciation of RMB against SGD & USD, it is better that YZJFH quickly converts RMB assets to SGD/USD. The longer it takes, the worse the exchange rate will be as Singapore i/r is increasing while China's i/r is falling. Logically, as the investment ops officer, I would have converted most of my promised SGD 1.1 billion committement now. Of course, if redemption has been delayed in China, YZJFH will be put in an unfavourable position and is likely to incur a large forex loss. Yuan has depreciated about 5% against SGD and 11% against the USD, USD is the preferred currency by YZJFH to hold in Singapore.

The alternative is for YZJFH to regenade on its promised shifting of investments into Singapore and say due to the unfavourable exchange rate, it has put its plans on ice and will continue to invest in China. Not palatable but is a possible move if it indeed is having difficulty in redeeming China maturing investments

Share Buyback Action

On side note, I notice YZJFH has been doing share buybacks of about 25% of the daily traded volume each day. Wonder how long will this persist and will they ever change this ratio

The way i see it the SBB is a case of trying to support the falling share price as it is way too early post listing to be executing SBB lol..

indeed we dont know WTH is happening in china, bug unknowns hence buying a company like this is as good as buying some crypto to me

[Squirrel]

YZJFH claims that its loans are secured by about two times the loan amount in collaterised value (LTV ratio 200%)

I caveat that these are claims and we will not know in times of default if it will happen; would YZJFH be able to seize the security, force sell it such that collected revenue- foreclosure expenses = loan amount.

This is China hence we do not know (i) politically will Xi JinPing allow normal acts of foreclosure to occur resulting in a massive sell down of property value and (ii) during times of foreclosure are the collaterised value even worth 50% of their valuation. Part (ii) is a normal business risk which even Singapore businesses/banks face, which is why LTV ratio is set at 140%

Rationale for an Early Conversion of RMB maturing assets to Singapore

Due to the constant depreciation of RMB against SGD & USD, it is better that YZJFH quickly converts RMB assets to SGD/USD. The longer it takes, the worse the exchange rate will be as Singapore i/r is increasing while China's i/r is falling. Logically, as the investment ops officer, I would have converted most of my promised SGD 1.1 billion committement now. Of course, if redemption has been delayed in China, YZJFH will be put in an unfavourable position and is likely to incur a large forex loss. Yuan has depreciated about 5% against SGD and 11% against the USD, USD is the preferred currency by YZJFH to hold in Singapore.

The alternative is for YZJFH to regenade on its promised shifting of investments into Singapore and say due to the unfavourable exchange rate, it has put its plans on ice and will continue to invest in China. Not palatable but is a possible move if it indeed is having difficulty in redeeming China maturing investments

Share Buyback Action

On side note, I notice YZJFH has been doing share buybacks of about 25% of the daily traded volume each day. Wonder how long will this persist and will they ever change this ratio

The way i see it the SBB is a case of trying to support the falling share price as it is way too early post listing to be executing SBB lol..

indeed we dont know WTH is happening in china, bug unknowns hence buying a company like this is as good as buying some crypto to me

Oh wow, if you reference it to crypto currency, and noting your sign off “virtual currencies are worth virtually nothing”. By that token, you seem to imply that YZJ FH is worth nothing.

I am glad there are such bashers out there. The longer this share price stays low the better. The company has cumulatively bought back 167m shares as part of its share buyback exercise. This is no mean feat. If their aim is to shore up prices, they could have flooded the market but they didn’t. I do think this is the best way forward. Am patiently waiting for the day they complete the 395m shares buyback. At current prices, they won’t even use up the $200m that was set aside. And then get another mandate to buy back more shares.

Yes, S chip is a scary word. Countless people were burnt. So probably one shouldn’t stake their whole fortune on S Chips. However, I personally do think this is one relatively safer one. It is a lot of work to spin off the investment arm. Promising to go global and diversify from its China portfolio requires showing of actual cash to do it. I am not sure which company would go to the trouble of doing this if they know they won’t have anything to show in a year’s time.

Oh well, the magical part of this whole process is that we would all know in a year’s time. Let’s watch the show.

[CY09]

In a test for YZJFH, there was an epsiode of a large sell down on the shares. 45 million shares have been traded as of now. This is the largest sell down in share volume since its PR in Sept

Given YZJFH strategy of constantly buying about 25%, this means during today's share buyback announcement, the company would have accumulated about 11 million+ shares. Let's see if the company is indeed doing share buyback as a price support mechanism
========

Full Time Update:

59.5 million shares traded, 7.85 million (~13.1% of trading volume) shares bought back. Wasn't the highest number of shares bought back in a single market day.

[BlueKelah]

YZJFH claims that its loans are secured by about two times the loan amount in collaterised value (LTV ratio 200%)

I caveat that these are claims and we will not know in times of default if it will happen; would YZJFH be able to seize the security, force sell it such that collected revenue- foreclosure expenses = loan amount.

This is China hence we do not know (i) politically will Xi JinPing allow normal acts of foreclosure to occur resulting in a massive sell down of property value and (ii) during times of foreclosure are the collaterised value even worth 50% of their valuation. Part (ii) is a normal business risk which even Singapore businesses/banks face, which is why LTV ratio is set at 140%

Rationale for an Early Conversion of RMB maturing assets to Singapore

Due to the constant depreciation of RMB against SGD & USD, it is better that YZJFH quickly converts RMB assets to SGD/USD. The longer it takes, the worse the exchange rate will be as Singapore i/r is increasing while China's i/r is falling. Logically, as the investment ops officer, I would have converted most of my promised SGD 1.1 billion committement now. Of course, if redemption has been delayed in China, YZJFH will be put in an unfavourable position and is likely to incur a large forex loss. Yuan has depreciated about 5% against SGD and 11% against the USD, USD is the preferred currency by YZJFH to hold in Singapore.

The alternative is for YZJFH to regenade on its promised shifting of investments into Singapore and say due to the unfavourable exchange rate, it has put its plans on ice and will continue to invest in China. Not palatable but is a possible move if it indeed is having difficulty in redeeming China maturing investments

Share Buyback Action

On side note, I notice YZJFH has been doing share buybacks of about 25% of the daily traded volume each day. Wonder how long will this persist and will they ever change this ratio

The way i see it the SBB is a case of trying to support the falling share price as it is way too early post listing to be executing SBB lol..

indeed we dont know WTH is happening in china, bug unknowns hence buying a company like this is as good as buying some crypto to me

Oh wow, if you reference it to crypto currency, and noting your sign off “virtual currencies are worth virtually nothing”. By that token, you seem to imply that YZJ FH is worth nothing.

I am glad there are such bashers out there. The longer this share price stays low the better. The company has cumulatively bought back 167m shares as part of its share buyback exercise. This is no mean feat. If their aim is to shore up prices, they could have flooded the market but they didn’t. I do think this is the best way forward. Am patiently waiting for the day they complete the 395m shares buyback. At current prices, they won’t even use up the $200m that was set aside. And then get another mandate to buy back more shares.

Yes, S chip is a scary word. Countless people were burnt. So probably one shouldn’t stake their whole fortune on S Chips. However, I personally do think this is one relatively safer one. It is a lot of work to spin off the investment arm. Promising to go global and diversify from its China portfolio requires showing of actual cash to do it. I am not sure which company would go to the trouble of doing this if they know they won’t have anything to show in a year’s time.

Oh well, the magical part of this whole process is that we would all know in a year’s time. Let’s watch the show.

The stock market for China and HK are so big, when an S-Chip comes to list here or to spin off something here you have to always think why they dont list back home

Yes we will see..

I will definitely be there to say something about it

[CY09]

As long as the company means its words and continue buying back shares, I think it is alright. What gives me a bit of worry is that it seems YZJFH is starting to slow down the pace of share buybacks relative to trading volume despite down days.

In terms of meeting the 10% share buyback mandate, YZJFH could cancel its purchased shares or hold a new EGM and it will never breach the 10% level until it utilises the $200 million warchest. Let's hope the company does this

Bluekelah is right that being a china listed company here means it falls in the S-chip branding. This is not good and to erase the stigma, YZJFH should be fulfilling its promise that its share buybacks acts as a price support mechanism. They have to do this, otherwise shareholders will start to doubt the mangement words like all other S-chips.

The procedure to keep buying backs shares is easy as what I have mentioned in Paragraph 2. The key is for the company to execute it.

What was unique today was that the sell down occurred at a few instances, which caused the share price to fall from 0.395 to 0.38 in less than an hour (it was not a one off block sell down but the selling persisted for over an hour). After all, YZJFH's claim was that its buyback is to support the share prices, however it seems what they were doing was ineffective and it turned out in today's share buyback announcement, they had bought less shares than usual when proportioning it to the trading volume. It was only until after 3pm that the bouts of sell down subsided

[CY09]

Just recevied notification of a sell down on YZJFH and I took a look.

What is interesting as I observe the first hour of trading volume is that the sell down is not an instant say 10 million of shares being sold in a single trade. Instead the sale are in multiple trades and sold over a period of time. Not sure if it is bluekelah who is orchestrating (just a joke here), but it seems there are many skeptics about YZJFH and the other end, the management has not been active in their price support mechanism words.

The volume of shares being sold down is staggering and stood at 28 million at half a day. This is where the actions of the management are tested if indeed they are doing price supports. 2 price tiers have been totally sold down by the pessmists

=====
Update at 6pm

68.86 million shares traded, 12.1 million (~17.6% of trading volume) shares bought back. Still have more to do, today's sell down was extensively bad and it was this company and its shipbuilding counterpart

[Squirrel]

Just recevied notification of a sell down on YZJFH and I took a look.

What is interesting as I observe the first hour of trading volume is that the sell down is not an instant say 10 million of shares being sold in a single trade. Instead the sale are in multiple trades and sold over a period of time. Not sure if it is bluekelah who is orchestrating (just a joke here), but it seems there are many skeptics about YZJFH and the other end, the management  has not been active in their price support mechanism words.

The volume of shares being sold down is staggering and stood at 28 million at half a day. This is where the actions of the management are tested if indeed they are doing price supports. 2 price tiers have been totally sold down by the pessmists

=====
Update at 6pm

68.86 million shares traded, 12.1 million (~17.6% of trading volume) shares bought back. Still have more to do, today's sell down was extensively bad and it was this company and its shipbuilding counterpart

Hi CY09,

I would like to direct you to the following Q&A supplied by the company.

19. What is the Group’s share buyback strategy?
The Group views the share buyback program as not just a price support mechanism but also an earnings accretion mechanism. As such, the Group is judicious in its points of entry for share buybacks. The Group will ensure that its share buybacks are in compliance with regulatory requirements. For example, they have to be conducted via open market purchases instead of buying only from selected shareholders.
20. The Group has announced a share buyback program of up to SGD200 million. Has the Group allocated SGD200 million of funds for share buyback or is it still subjected to the company’s future plans?
The Group has allocated up to SGD200 million of capital for share buyback and has almost one year to do so. The Group will continue to execute share buyback strategies to enhance shareholder value.
The amount of capital allocated for share buyback had taken into consideration the near-term investment needs of the Group.

From the above, my interpretation is that the main aim is not to support the price blindly, but to allow for strategic entries at “good prices”. Letting it drift down to collect more is one such way. In my personal opinion, that’s the best way, accretive to earnings. So I would think that it’s best not to expect large purchases just to support the price.

[CY09]

Then it would mean YZJFH does not have a clear buyback strategy.

Firstly, I notice the buyback volume has no pattern and is erratic. Second, the proportion of buybacks to trading volume has no pattern/ratio. Third during both up/down days, there are buybacks and at various price levels.

My sensing is the recent reduction in share buyback is due to the current buyback speed pushing them very quickly to the 10% mandate. The company may not want to hold a second EGM during the FY or cancel shares to continue utilisng its $200 million warchest