Yangzijiang Financial Holding

[weijian]

Since it declared a 200mil SBB program 2 years ago, YZJFH has completed ~80% of it. On VB.com, there was previously some discussion on the merits of continuing SBB post FY24 results. 2 weeks ago, I calculated that If YZJFH were to restart SBB at then prices, the value would be earnings yield of ~10% pro forma FY24 results. With this treasury share placement, the earnings yield can be inverted to imply that cost of equity=10%.

The reasons below do not pass my smell test (at least). But I reckon Chairman Ren probably recognizes that YZJFH is "a closed end fund". There are not a lot of opportunities to scale up capital unlike when it was coupled with ship building. And when we look at the past 2 years of cashflow statement, the Maritime Fund (treated as a subsidiary) attracted 150mil of outside capital (LP) and based on an estimation of its capital base of ~580mil, YZJFH's GP share is close to 75% which is really high. The action of placing out your treasury shares at 10% cost of equity may also implement that this GP:LP ratio isn't going to change much.

Yangzijiang Financial places out treasury shares to accelerate growth in maritime investments

Further, as the Sale Shares are Shares held in treasury, they are not income-generating and constrain the Company’s capital efficiency. The Proposed Sale allows the Company to monetise these shares at a premium to their historical acquisition cost, thereby unlocking their dormant value.

The Proposed Sale also strengthens the capital base of the Company and increases the Company’s public float, which will improve the level of trading liquidity of its Shares. This will in turn enable the Company to further attract institutional investors and stabilise its market performance.

https://links.sgx.com/FileOpen/Press%20R...eID=838066

[Big Toe]

Previously explained why the need to keep a significantly large cash hoard for YZJ F(and for ourselves as well).
The next few days/weeks/months or even 1-2 years is a sweet time to start deploying them.

I have progressively started buying bearing in mind the trade war may get much worse.
And that I may run out of ammo before things starts to get better.

[CY09]

Please note shipping is cyclical. 3 years boom and 7 years bane mainly.

I would not want to be deploying so much funds into maritime to try own luck. Instead if one uses the cash to buyback shares at 0.650-0.7 book value. The accretivie gain is 50-53% which is 5 years worth of maritime funds returns. As the saying goes, a bird in hand is worth two in the bush. What's more when the bird in hand is 5 times the value of each bird in the bush.

See you at upcoming AGM, I will be attending it will be raising the topic of share buyback and their debt invesmtent growing under performing loan portfolio as a proportion. See you guys at the AGM (if anyone is attending)

<Vested Core position>

[Big Toe]

Nothing will be set in stone, especially when trump is around. Just when I finished the post, trump announced a pause at the same time upping his game with China. The worst maybe over but heaps of uncertainty remains. (translated to plenty opportunities ahead)

In shipping, there are so many different ways money can be put to work, ie niches. In every industry there will be niches(of much much smaller market size) where returns can be above average. And while Chairman Ren says it is for shipping, cash do not have to be confined to just be just shipping if another great opportunity presents itself. I dont think SBB is a good idea at this point.

Wont be attending AGM but I do greatly appreciate all the effort of everyone posting their views and what transpired at the AGM.

[CY09]

https://www.tradewindsnews.com/bulkers/y...-1-1805526

Orders for ship bulkers and from a china ship builder. With the recent spate of orders from China shipyards by YZJFH, Yangzijiang financial seems to be growing into a ship owner. Reminds me more of First Ship Lease trust and rickmers model, except without leverage

[CY09]

Logging the notes from AGM

1) Chairman says he is leveraging on his decades in shipping to move YZJFH to the next frontier. The primary business will be in ordering ships from shipyards in partnership with ship owners/those who own fleet (and those who are financially stable), the latter will finance a small part of the ship price, while YZJFH will finance the rest via its maritime fund. Chairman assured shareholders he can spot opportunities and described this year how he profitted for the company by first paying to YZJSB to build and then reselling it at a higher price after the ship was delivered to him. This is the main modus operandi of YZJFH. Chairman said the promised of delivery is important because there are cases when people who want to buy ships as they have charterer orders and because YZJFH has spare ships in its fleet to sell, people come to Chairman Ren to buy a ship from him. Using as an anology, its like building condos beforehand and flipping it out when it TOPs.

2) YZJFH will finance such shipping opportunties when banks do not want to finance these ship owners, yet at a slightly higher percentage points (1-3%) compared to usual bank loans. Chairman Ren says he has decades of experience and is discerning such that he can spot such opportunities. This is far better when he foolishly listened to others and invested in real estate debt financing which produced mediocre results. if the ships are not resold or the owners do not pay back YZJFH the capital+interest after some time post delivery from shipyards, YZJFH will re possess the ship from the ship owners and find opportunites to charter these ships

3) He said in the shipping industry, the financially weak ones will collapse due to the trade war and as YZJFH is financing their own portion with full cash (equity) and no leverage, they can weather the storm. He will shop around from Chinese Shipyards to build ships and if there is a need for high spec ships with a certain delivery time, he will turn to YZJSB that he can rely on, as opposed to other China shipyards

4) Chairman assured as long as he is around 40% dividend payout ratio is maintained. A shareholder asked of the possibility of a higher payout ratio which Chairman said "no" at the moment because he sees opportunity in the shipping sector and wants to deploy cash there which will help grow YZJFH

5) Share buyback will not be considered unless share prices fall drastically because he is deploying most of the spare cash into ship financing, by placing many orders from China shipyards to resell in the market or to ship charter as a fleet under YZJFH.

6) NPL in China's DI is still on track to close by 2026 on a 40%/30%/30% timeline. Chairman said YZJFH did close 30% of the NPL in end 2024 as per what he promised in 2024's AGM, though it seems on balance sheet figures it was not the case.

7) Chairman is aligned with shareholders and is only drawing annual pay of 60k while the rest of the wealth is based on dividends and capital appreciation of his stake in the company

8) They might consider holding more cash in SGD due to the stability of the Sing dollar.

My view is that in the worst case scenario, YZJFH will become a large fund with high percentage in the maritime investment fund. It will outright own ships in which it will use a fleet management subsidary to charter its ships out for orders. Something like the shipping trusts in the past except YZJFH does not lever which prevents a worsening of debt ratio which may lead to force sell. At worst, shareholders of YZJFH will get residual (scrap value) of the ship as its NAV

[weijian]

8) They might consider holding more cash in SGD due to the stability of the Sing dollar.

hi CY09,

Thanks for selflessly sharing these notes. I believe this item is more of a tongue-in-cheek comment by Chairman Ren. Historically, YZJFH only needs SGD when they pay dividends. The currency of choice is mainly determined by investment opportunities (returns, liquidity, paying for ships) and not the stability of the currency. Of course, one will not invest in Zimbawee notes.

Under note30 (currency risk) in AR24, you will notice that YZJFH is exposed to multiple currencies mainly due to their multicurrency cash mgt but each currency exposure is reduced with currency contracts. In the past few years, it is generally just long a single currency (USD) which aligns to its intention to bring a big bulk of the assets offshore and to become an international fund mgt firm.

[CY09]

No prob weijian.

One thing good about Chairman Ren is he is very direct in his direction and articulates it albeit in Mandarin. So shareholders do not need to second guess and this makes valuing YZJFH very easy since we know what he plans to do (in this case, he is going towards ship financing and using all the cash and 60% earnings to grow it)

[weijian]

Since it declared a 200mil SBB program 2 years ago, YZJFH has completed ~80% of it. On VB.com, there was previously some discussion on the merits of continuing SBB post FY24 results. 2 weeks ago, I calculated that If YZJFH were to restart SBB at then prices, the value would be earnings yield of ~10% pro forma FY24 results. With this treasury share placement, the earnings yield can be inverted to imply that cost of equity=10%.

The reasons below do not pass my smell test (at least). But I reckon Chairman Ren probably recognizes that YZJFH is "a closed end fund". There are not a lot of opportunities to scale up capital unlike when it was coupled with ship building. And when we look at the past 2 years of cashflow statement, the Maritime Fund (treated as a subsidiary) attracted 150mil of outside capital (LP) and based on an estimation of its capital base of ~580mil, YZJFH's GP share is close to 75% which is really high. The action of placing out your treasury shares at 10% cost of equity may also implement that this GP:LP ratio isn't going to change much.

Yangzijiang Financial places out treasury shares to accelerate growth in maritime investments

Further, as the Sale Shares are Shares held in treasury, they are not income-generating and constrain the Company’s capital efficiency. The Proposed Sale allows the Company to monetise these shares at a premium to their historical acquisition cost, thereby unlocking their dormant value.
The Proposed Sale also strengthens the capital base of the Company and increases the Company’s public float, which will improve the level of trading liquidity of its Shares. This will in turn enable the Company to further attract institutional investors and stabilise its market performance.

https://links.sgx.com/FileOpen/Press%20R...eID=838066

Less than 3 weeks after announcing the deal, the purchasers have decided to exercise their right to abort the purchase as share price has dropped to less than 85% of the closing price on 28th March 2025. The purchasers had 90days to close and so plenty of time left. So I guess they either couldn't handle the "pessimism" or think the "pessimism" is justified, or simply found better places to deploy their 140mil elsewhere.

Coincidentally in the AGM yesterday when a shareholder asked about it, the BOD had indicated that they had not heard any thing from the purchasers. So we can conclude that the purchasers sent in their cancellation request and Chairman Ren decided to cancel them, all in the span of the last 24 hours.

Personally, I don't agree that treasury shares are not income generating as per previous announcement. But of course, I can also understand Chairman Ren prefers to use placement proceeds to buy new vessels. IMHO, cancelling these shares are the best course of action. It will be interesting to come back 5 years later to retrospectively calculate the impact of cancelling these shares.

NOTICE OF CANCELLATION OF TREASURY SHARES

Number of treasury shares held before cancellation : 193,527,600
Number of treasury shares held after cancellation : 0
Value of treasury shares cancelled : S$66,121,508

https://links.sgx.com/FileOpen/Yangzijia...eID=841382

[Big Toe]

This is the level of decisiveness I greatly appreciate. Unlike the orange man, flip flopping every other minute.

Share price battered- Buy Back
Funds interested to purchase Treasury shares @ a reasonable price Ie more than double buy back price- Sell and use proceeds to add to war chest
Parties decided to terminate agreement - Checks and allows for the termination and immediately cancels the treasury shares.

Chairman Ren is probably thinking, what a bunch of wimps, they dont deserve my shares anyway. Just watch how I grow this biz.