Yangzijiang Financial Holding

[Squirrel]

Would like to get a discussion going on an alternative view of how much YZJ FH is really worth. There has been much commentary going on with the share price on a persistent downtrend. Is it cheap or is it not?

https://www.thesquirrelsdrey.com/post/ya...uld-you-do

Hi Squirrel,

YZJSB essentially started out as a ship builder before venturing into finance. So there will be a bias towards ship building, resulting in shareholders who gotten FH shares, selling those shares and ploughing the proceeds back into SB. So, it is some great 2nd level thinking you have, to exploit this bias.

I do observe that Ren Yuanlin, has "come out of retirement" and has taken on the executive chairman at FH. In earlier posts, specuvestor has been waiting for ~14 years (and counting) for them to blow up since they started the non core financing arm. If Chairman Ren (Father) is a seasoned battle hardened businessman who is able to straddle seamlessly between politics and business worlds, then it is heartening to see him taking up the role again.

Thanks for the compliment. There are various aspects of YZJ FH that I hold views on but have yet to comment on. My article was going towards establishing a baseline minimum theoretical valuation so that I can assess the buffer of safety for entering at the point in writing.

It would be interesting to see how the share buyback pans out and how it’s delivered. Best case scenario is it goes the way of Keppel Corp which announced $500m in buybacks when it was trading at around $9.4bn market cap. It’s currently trading at $12bn market cap in the 2022 general environment whereby most stocks have taken a beating. I can’t attribute all of the change to the share buyback but I assume it helped significantly. Most importantly I am paid to wait.

[Squirrel]

EPS = NPAT/average number of shares.
Since the spin off happened in 2022, I assumed that for 2021 illustrative , share count before buyback is taken as average number of shares.

https://links.sgx.com/FileOpen/Yangzijia...leID=55216

When I look at YZJFH, I look at track record, and its record is based on lending. Post spin off, YZJFH suddenly know how to and expand to invest in all kind of stuffs. So the question is will YZJFH able to compete in 100m, 200m, 400m, long jump after spin off after spending years trying to be Joseph Schooling. 

para 2.3 (a)
A Leading Investment Management Business and Debt Investment Business in Asia, in terms of the Spin-Off Group’s total AUM size and/or market capitalisation compared to other publicly listed investment management companies in Asia(1)

para 2.3 (b) Strategies and Future Plans
Upon the listing of YZJFH on the Mainboard of the SGX-ST, the Spin-Off Group intends to pare down its Debt Investment Business and continue to strengthen its position by pursuing growth via its Investment Management Business and by entering into the Fund/Wealth Management Business, underpinned by focused strategies to (a) grow its Investment Portfolio in the PRC; (b) recycle capital from the Debt Investment Business to Fund Investments in the Investment Management Business; © extend its investment footprint into Singapore by partnering prominent Fund
management companies to launch co-GP Funds; (d) diversify into fast-growing sectors and new asset classes; and (e) establish the Fund/Wealth Management Business via the acquisition of a CMS-licensed fund management company or the setting up of a fund management company in Singapore.

I do see the concerns, and I believe so do many other investors who got into this based on an investment thesis based on its shipbuilding sector. Which, in my opinion, created a rush for the exit scenario that has come to past. My considerations are the following.

1) the company is not converting all debt investments entirely to something else, but a mixture of debt investments, mezzanine debt and private equity. A large part of what they envision to do next are either what they are currently doing and related

2) they have already started on the alternative investments before the spin off and have decent but short track records

3) if you are an investor in short term debt that sits high in the capital structure, you would have to be familiar with all aspects of the debt financing including subordinated or mezzanine debt in order to manage your investment effectively. Thus, in that sense, the management of those areas are not exactly new. The metrics such as interest servicing and debt loads would be basically the same but just at a different level in the capital stack.

4) the most important part to fund managers is actually access to capital. Talent would come after in this fluid industry. Anyone who have $1bn of readily available investible cash would immediately propel to the big leagues. Take Dymon Asia for example. It’s flagship fund is a macro fund that has little to do with Private Equity, and yet over the years it has raised more than $750m in their private equity fund 1 and 2. I don’t know Dymon Asia’s internal workings but I do believe their sizing in their macro fund does help in establishing their priVate equity funds, which in the same context would not have any historical track record. Having the money solves a lot of concerns for talents in this industry, which is hopping to a shop with no money to do anything. Money is the blood that courses through the veins of fund management.

Having said the above, there is of course the risks involved with investing in YZJ FH. Then comes the question. Is the risk worth it? Investing in shares is all about risk taking and the appropriate amount of risk to take. At the current book value of 0.45 and pending catalysts from share buybacks, my personal opinion is that the risk reward ratio is very attractive. In fact it’s an opportunity that would never have happened if not for the listing for the company via introduction.

[Squirrel]

https://www.businesstimes.com.sg/compani...ings-up-to

YangZiJiang Financial Holdings continue to pursue shareholder friendly measures. I am waiting for the share buy backs to start. Keppel Corp announced a share buyback program of $500m on $10bn market cap and that went a long way. This is probably with a much higher public shareholder ownership than YZJ Financial Holdings. If YZJ Financial Holdings decides to buy back 10% of outstanding shares with slightly more than half owned by public shareholders, that will be significant.

[retired1again]

YZJ Shipbuilding announced the sale of all YZJFH shares of overseas shareholders and distribution of the net proceeds to overseas shareholder today. Could this be one of the reasons recent YZJFH depressed share prices?

[Squirrel]

YZJ Shipbuilding announced the sale of all YZJFH shares of overseas shareholders and distribution of the net proceeds to overseas shareholder today.  Could this be one of the reasons recent YZJFH depressed share prices?

That’s probably hard to gauge since we don’t know the extent of sales. It’s easier to gauge the share buybacks though since we know it’s 10% at max. That’s one out of every five shares held by public shareholders.

[Squirrel]

As I have earlier said, talent would follow the money.

https://www.finews.asia/people/37030-gic...-financial

“ Yangzijiang Financial Holding (YZJFH) has named a long-tenured private equity expert as an investment advisor.

Sean Low Shieng Ang, who served at Singapore’s sovereign wealth fund GIC for 17 years, was appointed as a senior advisor to YZJFH, the asset manager recently spun off from its shipbuilding parent, an announcement sent on Monday indicated.

Low will provide advice on investment portfolio construction and asset allocation. His last role at GIC was as senior vice president at GIC PE where he initially led the private equity fund investment team and subsequently headed the private credit and special opportunities group within the global investment strategy and risk team.”

[smallcaps]

S$200 million Share Buy-back Programme

https://links.sgx.com/FileOpen/YZJFH%20S...eID=720296

...
The purpose of the Programme is to increase Shareholders’ value and improve the return of equity of
the Group.
The Programme will be effected in accordance with the terms of the Buy-back Mandate. The Company
intends to purchase up to S$200 million of Shares of the Company (“Share”) via market purchases.
The maximum number of Shares which may be purchased by the Company under the Programme is
395,058,922 (amounting to 10% of the issued Shares). It is currently intended that any share that is
repurchased pursuant to the Programme will be held as treasury
...

[Squirrel]

S$200 million Share Buy-back Programme

https://links.sgx.com/FileOpen/YZJFH%20S...eID=720296

...
The purpose of the Programme is to increase Shareholders’ value and improve the return of equity of
the Group.
The Programme will be effected in accordance with the terms of the Buy-back Mandate. The Company
intends to purchase up to S$200 million of Shares of the Company (“Share”) via market purchases.
The maximum number of Shares which may be purchased by the Company under the Programme is
395,058,922 (amounting to 10% of the issued Shares). It is currently intended that any share that is
repurchased pursuant to the Programme will be held as treasury
...

A great outcome by and large. It would have been most bang for the buck if they announced an EAO. But that would not have the desired effect of supporting the share price.

[weijian]

YZJ Shipbuilding announced the sale of all YZJFH shares of overseas shareholders and distribution of the net proceeds to overseas shareholder today.  Could this be one of the reasons recent YZJFH depressed share prices?

That’s probably hard to gauge since we don’t know the extent of sales. It’s easier to gauge the share buybacks though since we know it’s 10% at max. That’s one out of every five shares held by public shareholders.

2mil out of a ~1.8bil market cap is ~0.1% of shares and so probably not much of an impact.

SALE OF SHARES OF OVERSEAS SHAREHOLDERS AND DISTRIBUTION OF THE NET PROCEEDS TO OVERSEAS SHAREHOLDERS – CLARIFICATION ANNOUNCEMENT

Further to the Announcement, the Board wishes to inform that in respect of the sale of the YZJFH Shares of Overseas Shareholders, an aggregate of 4,649,536 YZJFH Shares were sold during the period from 17 May 2022 to 2 June 2022 on the open market of the SGX-ST at a price ranging from S$0.41 to S$0.515. The total proceeds received by the Company from the sales amounted to S$2,171,247.9

https://links.sgx.com/FileOpen/YZJ%20Shi...eID=721371

[Vseeker]

YZJ Shipbuilding announced the sale of all YZJFH shares of overseas shareholders and distribution of the net proceeds to overseas shareholder today.  Could this be one of the reasons recent YZJFH depressed share prices?

That’s probably hard to gauge since we don’t know the extent of sales. It’s easier to gauge the share buybacks though since we know it’s 10% at max. That’s one out of every five shares held by public shareholders.

2mil out of a ~1.8bil market cap is ~0.1% of shares and so probably not much of an impact.

SALE OF SHARES OF OVERSEAS SHAREHOLDERS AND DISTRIBUTION OF THE NET PROCEEDS TO OVERSEAS SHAREHOLDERS – CLARIFICATION ANNOUNCEMENT

Further to the Announcement, the Board wishes to inform that in respect of the sale of the YZJFH Shares of Overseas Shareholders, an aggregate of 4,649,536 YZJFH Shares were sold during the period from 17 May 2022 to 2 June 2022 on the open market of the SGX-ST at a price ranging from S$0.41 to S$0.515. The total proceeds received by the Company from the sales amounted to S$2,171,247.9

https://links.sgx.com/FileOpen/YZJ%20Shi...eID=721371

The Wted-Ave selling price was s$0.4664 pShr (Net of expenses)
and Overseas Shrhldrs received s$0.4664 for each YZHFH Shr