Yangzijiang Financial Holding

[Squirrel]

It has been weeks since the AGM approved the renewal of SSB. However, no SSB has been activated.

Its indeed true that the company is cash rich and I thought with YZJ Finance languishing at very low valuations (at 0.3 times P/B) , some SSB will enhance shareholder value. However, this is not the case. I wonder where is their cash being locked at as they have not made any new cash injections into funds as well

I have a very simplistic explanation for this. The company was waiting for the dividend ex date before resuming SBB.

Treasury shares are not paid dividends. I would believe that the dividend number has been fixed and set aside to pay out to non treasury shares. Doing any SBB in between AGM to dividend ex date would result in this number changing every time a buyback is done. Administratively, there is just no need to complicate matters. The company has stated as well that they are not in a hurry to spend their cash on buybacks as these can form anchoring contributions to funds that they launch.

That’s just my simplistic way of looking at it. Maybe the 3m shares buyback today help supports it.

[CY09]

Yep saw it. Hopefully the company stick to the guns and continue buying. There is indeed much value if the company's business is correct, with a 200% returns.

The Market value on YZJ finance has been moved even lower today. Hopefully the company takes the opportunity to keep doing SBB because there is value

[dreamybear]

I have a very simplistic explanation for this. The company was waiting for the dividend ex date before resuming SBB.

Looks to be the case. Today SBB another 3m shares : https://links.sgx.com/1.0.0/corporate-an...39874b3806

[CY09]

Company went quiet on share buyback until yesterday.

https://links.sgx.com/1.0.0/corporate-an...e5522b34fc

Hoping that they can forever be doing a SBB at 0.345, its only at 0.3 times P/B which is very cheap. Furthermore. Dividends are expected to move to estimated 2 cents with no further known impairments. That's a 6% dividend yielder for a company with no leverage.

Same dividend rate as REITs but with no financial leverage!

[CY09]

While prices have remained at 0.335/0.34, the company has gone dead quiet on SSB again. With such a cash pile, I do hope the mgmt buys more of the shares from open market. At 0.34, the company can obtain 200% returns instantly if its investment portfoilo is real.

Personally, I expect next year's physical AGM to be where shareholders will clamour for more things to be done to realise shareholder value. I know of other YZJ finance shareholders who have written (to me) about the lack of action by the company. Yes business wise, they are coasting through but not doing things to realise shareholder value is another issue.

[Yoyo]

Investor Relation Talk - 4 July 2023
https://m.youtube.com/watch?v=Yd6NNpn1A8...e=youtu.be

[dreamybear]

1H2023 Media Release
https://links.sgx.com/FileOpen/YZJFH%201...eID=768868
"Yangzijiang Financial Holding reports 27.2% YoY Growth in Diluted EPS for 1H2023
• Total income gained 14.2% y-o-y to S$198.4 million, while net profit rose 19.2% to S$162.5 million in 1H2023
• NAV per share improved to S$1.0520 as at 30 June 2023 vs S$1.0495 as at 31 Dec 2022
• NPL ratio declined to 37% as at 30 June 2023, from 41% as at 31 Dec 2022
• The Group’s strategy of diversifying beyond China will continue to enhance its fundamentals, and generate long-term, sustainable returns
......."

1H2023 FS
https://links.sgx.com/FileOpen/YZJFH%20A...eID=768867
"The Group would like to highlight that it has made good progress in tackling the Non-Performing Loans (“NPLs”) in its debt investment portfolio in China, due to effective recovery efforts in 1H2023.... Moving forward, while the Group is cautiously optimistic about the recovery prospects of its remaining NPLs, it will continue to diligently monitor and pro-actively manage its loan book...

Amid still cloudy prospects overhanging China’s economy, and in particular, its property market, the Group remains cautious of its debt investment in China and will actively and progressively diversify its assets beyond China ..."

[CY09]

The amount for "Allowance for Impairment Loss" for debt investments is getting larger year on year. Below is the breakdown thus far:

2021- SGD 398,705,000 for total debt investment of SGD$3,920,158,000 (10.2% impairment)
2022- SGD 255,143,000 for total debt investment of SGD$2,908,698,000 (8.7% impairment)
1H2023- SGD 228,299,000 for total debt investment of SGD$2,843,383,000, (8% impairment)

1H2022- SGD 123,271,000 for total debt investment of SGD$2,781,200,000, (4.4% impairment)

China's property market, and to some extent a few of its economic sectors are weakening. For YZJFH to log an 8% impairment for just 1 half of a full year result is a lot. I sincerely hope we dont see a repeat of another 8% impairment for 2H 2023, this will log in a 16% impairment which is the highest

To add to that, it seems YZJFH had redeemed 262 million in debt investment but parked 210 million in long term debts. The redemption of 262 million is only 9% of its China debt investment. In its end of year 2022, presentation, YZJFH presented that 87% of its debt investments matures within 1 year. For only 9% to be redeemed thus far for 6 months when it had 87% avaliable for redemption shows that YZJFH has troubles either (i) redeeming its maturing debt investments in China or (ii) that the company has changed its previous goal of moving money out of China and into Singapore, thus sticking to China. Given the supposedly honesty of the company management, I think they will not anyhow shift the goalpost in 1 year and therefore I believe YZJFH is facing the situation in (i) where it finds difficulty redeeming its debt investments to a large extent.

Secondly, to roll over another SGD210 million of debt investment when it has redeemed only 9% is another alarming sign and possibility of difficulty in redemption. After all, YZJFH has a goal of moving 50% of its assets out of China and hence it is counter intuitive for it to redeem 9% and put back about 7% into China when its goal is to shift investments out of China as diversification

[Big Toe]

At current share price. It would still be a bargain even if ALL of the allowance for impairment are realized and that ALL of the NPL are written off. China real estate and to a large extent, the overall chinese economy is in bad shape. On the ground, things are worse than what is reported.

Agree that the progress of moving 50% assets out of china is somewhat slow. Either they face difficulties moving funds out OR face difficulties in redemptions within china itself OR the new risk/reward ratio is so attractive that they decided to fish in troubled waters and stay on a little longer and slow down the process.

Bear in mind RMB weakened significantly against USD and SGD. Most foreign firms with significant businesses in China are severely affected due to exchange loss + real estate gloom + weak economy. Against this backdrop, I would argue they did a good job.No question they are in the midst of a very bad patch. Things should eventually turn around, hopefully sooner rather than later.

[Yoyo]

YZJFH 1H 2023 
Note 15 Debt Investment (DI)
Allowance for impairment loss
Opening 255,144
Ending 228,299
Reversal to P&L (ie writeback) 8,493
Debt Investment written off is 18,352 ie 255,144 - 228,299 - 8,493
(Update - 1H2023 Result Presentation stated that there is no utilisation, hence the difference is probably due to (a) currency translation and (b) interest on loan.  Don't understand why management segregate the principal and interest portion of the loan).

Redemption 452,007 (vs 1H2022 of 1,187,773)
New DI 474,373 (vs 1H2022 914,656)

As at end Dec 2022, the current portion of DI is 2,264,600.  
1.  The 452m redemption (in the first 6 months) represents 20% of the current DI (to be redeemed within 12 months) 
2.  Some of these current DI may have been refinanced/repackaged with a longer repayment period, resulting in amount rollover to the non-current portion.

Issue - While it is management intention to scale down DI, is it reasonable to expect a complete STOP to approving new DI for the half year?  Don't get me wrong, I would very much like to see a meaningful reduction in the total DI amount.

Note 16 Trade and Other Receivables
1.  Allowance for impairment of loans to non-related parties – microfinance
The reduction is likely to be loan written off of 1,779
2.  Nature of the 105,309 increase in other receivable - non-related parties - other assets (money placement for some yet to disclosed business venture?)