Yangzijiang Shipbuilding (Holdings)

[Greenrookie]

Yangzijiang update:

Yangzijiang has win orders for 9 boat barge orders.
www.yzjship.com/en_newsinf.asp?id=952

China stimulus for shipping industry coming!
www.sinoshipnews.com/news_content.php?fid=3w3c1526

How come YZJ does not need to annouce throu the sgx about the order wins???
YZJ is performing worse than STI, which I guess is mainly due to the risk involved with HTM and recent china squeeze on money to flush out shadow finance.

MOre than half of its HTM is generating interest rate of more than 12%, and about 1/6 of it HTM is above 18%.
Kinda of scary regarding the fate of these 1/6 of the HTM and to a lesser extent half of the HTM.

Assuming half of the higher interest HTM need to be impared, it will be 3 billion, slightly less than 20% of net assets.

(closely monitoring but vested and accumulating : Very biased)

[felixleong]

ya quite weird that there's not sgx annoucement on this
things looking better

[camelking]

I guess the contract awarded hasn't reached the threshold for mandatory announcement.
The threshold is based on NTA of the last audited report.
Can't remember the percentage of the threshold though....

[CityFarmer]

As YZJ's chairman, Mr. Ren stated, the shipping industrial is at the bottom, and on its way to recover ...

Asia shipping industry pain may be investors’ gain

SINGAPORE – Private equity and investment funds in the United States are betting that Asia’s shipping industry, hit by a restructuring wave that has already swept Europe and the United States, is the best spot to ride a recovery from the industry’s worst downturn in three decades.

Sturdy commodity demand growth and slower new ship deliveries will help balance fleet and cargo demand for the first time since 2004, analysts say, boosting freight rates by next year and into 2015.

http://www.todayonline.com/business/asia...stors-gain

[BlueKelah]

Yangzijiang update:

Yangzijiang has win orders for 9 boat barge orders.
www.yzjship.com/en_newsinf.asp?id=952

China stimulus for shipping industry coming!
www.sinoshipnews.com/news_content.php?fid=3w3c1526

How come YZJ does not need to announce throu the sgx about the order wins???
YZJ is performing worse than STI, which I guess is mainly due to the risk involved with HTM and recent china squeeze on money to flush out shadow finance.

MOre than half of its HTM is generating interest rate of more than 12%, and about 1/6 of it HTM is above 18%.
Kinda of scary regarding the fate of these 1/6 of the HTM and to a lesser extent half of the HTM.

Assuming half of the higher interest HTM need to be impared, it will be 3 billion, slightly less than 20% of net assets.

(closely monitoring but vested and accumulating : Very biased)

I like the last sentence best if you click the stimulus link:
"Latest figures show that more than 80% of all listed Chinese shipping lines are in the red for the second straight year." [26/06/13]

the HTM sounds very dodgy. Interest rate 12-18% sounds unsustainable for the borrower. I suspect YZJ issued the loans to bring in business.

Not a value proposition now if you do factor in possible impairment of the loans.

I would assume those buying are BETTING for a turnaround in the near term?

[CityFarmer]

Yangzijiang update:

Yangzijiang has win orders for 9 boat barge orders.
www.yzjship.com/en_newsinf.asp?id=952

China stimulus for shipping industry coming!
www.sinoshipnews.com/news_content.php?fid=3w3c1526

How come YZJ does not need to announce throu the sgx about the order wins???
YZJ is performing worse than STI, which I guess is mainly due to the risk involved with HTM and recent china squeeze on money to flush out shadow finance.

MOre than half of its HTM is generating interest rate of more than 12%, and about 1/6 of it HTM is above 18%.
Kinda of scary regarding the fate of these 1/6 of the HTM and to a lesser extent half of the HTM.

Assuming half of the higher interest HTM need to be impared, it will be 3 billion, slightly less than 20% of net assets.

(closely monitoring but vested and accumulating : Very biased)

I like the last sentence best if you click the stimulus link:
"Latest figures show that more than 80% of all listed Chinese shipping lines are in the red for the second straight year." [26/06/13]

the HTM sounds very dodgy. Interest rate 12-18% sounds unsustainable for the borrower. I suspect YZJ issued the loans to bring in business.

Not a value proposition now if you do factor in possible impairment of the loans.

I would assume those buying are BETTING for a turnaround in the near term?

I am one of those bought the company.

I bought it for various reasons. Betting for a turnaround is one of them.

The company's investment segment consists of micro-financing and investments in held-to-maturity (HTM) financial assets.

I assume the concern is more on micro-financing, than on HTM financial assets. An interest rate of 12-18% is reasonable in China business environment, with "private" market rate of 20-40% as far as i know.

[Greenrookie]

Yangzijiang update:

Yangzijiang has win orders for 9 boat barge orders.
www.yzjship.com/en_newsinf.asp?id=952

China stimulus for shipping industry coming!
www.sinoshipnews.com/news_content.php?fid=3w3c1526

How come YZJ does not need to announce throu the sgx about the order wins???
YZJ is performing worse than STI, which I guess is mainly due to the risk involved with HTM and recent china squeeze on money to flush out shadow finance.

MOre than half of its HTM is generating interest rate of more than 12%, and about 1/6 of it HTM is above 18%.
Kinda of scary regarding the fate of these 1/6 of the HTM and to a lesser extent half of the HTM.

Assuming half of the higher interest HTM need to be impared, it will be 3 billion, slightly less than 20% of net assets.

(closely monitoring but vested and accumulating : Very biased)

I like the last sentence best if you click the stimulus link:
"Latest figures show that more than 80% of all listed Chinese shipping lines are in the red for the second straight year." [26/06/13]

the HTM sounds very dodgy. Interest rate 12-18% sounds unsustainable for the borrower. I suspect YZJ issued the loans to bring in business.

Not a value proposition now if you do factor in possible impairment of the loans.

I would assume those buying are BETTING for a turnaround in the near term?

I am one of those bought the company.

I bought it for various reasons. Betting for a turnaround is one of them.

The company's investment segment consists of micro-financing and investments in held-to-maturity (HTM) financial assets.

I assume the concern is more on micro-financing, than on HTM financial assets. An interest rate of 12-18% is reasonable in China business environment, with "private" market rate of 20-40% as far as i know.

Hi City farmer,

I initially thought that the HTM assets are bonds, and will be unaffected than compared with micro-finacing. But when I tried to read closely regarding the HTM, there is no word such as bonds, rather (iirc) I saw loans.

When I tried to understand what the hell is shadow banking, I come to this conclusion: (accept comments)

YZJ being one of the biggest shipyards in china, and also being in the industry whereby PRC is trying to grow and consolidate and reform, has no problems getting loans from banks. (Clean loans, on banks' balance sheet)

YZJ AR states interest is around 4%, and YZJ is cash rich due to its prudent management, so it use some of the money to loan to others and bridge by the banks at a much higher interest rate. These loans are short term, and being the source of money now comes from YZJ, it need not appear in banks balance sheet.

I also believe its HTM is what they are saying in the news, banks are peddling wealth management products.. HTM in another name.

So, A loan to B, B use A money to loan to C at even higher rate. IF C can't pay, B suffers, and too many of C can't pay, B can't pay A too.

A= china banks
B= YZJ
C= HTM companies

Correct??? B aka shadow bank, C aka wealth management products?? No??

Doesn't change the fact that I still like YZJ, and has actually accumulate more. I hope it doesn't go to my next entry point though, if it reach there, I will accumulate and if proven wrong choice.. then sigh... (They say its difficult to be courageous when others are fearful, I agree)

[Greenrookie]

http://info.sgx.com/webcoranncatth.nsf/V...E003139A6/$file/Announcement_20130704_Changbo.pdf?openelement

The total consideration for the Acquisition is RMB110,000,000. The amount of the investment was
arrived at after an arms’ length negotiations on a willing buyer willing seller basis and taking into
account, inter alia, the net book value of RMB286,098,601 of JCSC as at 31 December 2012

seems like a good deal, but changbo is already idle, so not impact on earnings of whatsoever, just bigger capacity to capture maket share when the turnaround come

the juicy news is this
http://info.sgx.com/webcoranncatth.nsf/V...E0030D407/$file/Announcement_20130704_corporateupdate.pdf?openelement

The new Contracts secured comprise of six (6) units of 82,000 DWT bulk carriers, eight (8)
units of 64,000 DWT bulk carriers and one (1) unit of 94,000 DWT transload vessel;
whereby such vessels are scheduled for deliveries in the period from 2015 to 2016, and
therefore will not have any significant impact on the earnings of the Group for the financial
year ending 31 December 2013.

In 1H2013, the Group had secured a total of twenty-seven (27) effective shipbuilding
contracts with an aggregate value of US$1.01 billion. As at the announcement date, the
Group has a total of 51 options worth US$2.64 billion entered with its respective buyers, of
which 22 options are for containerships worth US$1.56 billion and 29 options are for multipurpose bulk carriers worth US$1.08 billion. With the Baltic Dry Index recently achieving a
52-week high of 1179 points, the Group is confident that more options will be exercised in
2H2013. Pertaining to the cessations declared by the Group for its three 2500TEU
shipbuilding contracts previously, the Group has sold all of them to the new customer in 2Q
2013.

[safetyfirst]

So, A loan to B, B use A money to loan to C at even higher rate. IF C can't pay, B suffers, and too many of C can't pay, B can't pay A too.

A= china banks
B= YZJ
C= HTM companies

To offer another perspective, has anyone wondered that if the HTM companies are forced to borrow from YZJ instead of from china banks, then it is very likely that many of them have terrible finances. What if YZJ has difficulties collecting back its loan?

[CityFarmer]

Hi City farmer,

I initially thought that the HTM assets are bonds, and will be unaffected than compared with micro-finacing. But when I tried to read closely regarding the HTM, there is no word such as bonds, rather (iirc) I saw loans.

When I tried to understand what the hell is shadow banking, I come to this conclusion: (accept comments)

YZJ being one of the biggest shipyards in china, and also being in the industry whereby PRC is trying to grow and consolidate and reform, has no problems getting loans from banks. (Clean loans, on banks' balance sheet)

YZJ AR states interest is around 4%, and YZJ is cash rich due to its prudent management, so it use some of the money to loan to others and bridge by the banks at a much higher interest rate. These loans are short term, and being the source of money now comes from YZJ, it need not appear in banks balance sheet.

I also believe its HTM is what they are saying in the news, banks are peddling wealth management products.. HTM in another name.

So, A loan to B, B use A money to loan to C at even higher rate. IF C can't pay, B suffers, and too many of C can't pay, B can't pay A too.

A= china banks
B= YZJ
C= HTM companies

Correct??? B aka shadow bank, C aka wealth management products?? No??

Doesn't change the fact that I still like YZJ, and has actually accumulate more. I hope it doesn't go to my next entry point though, if it reach there, I will accumulate and if proven wrong choice.. then sigh... (They say its difficult to be courageous when others are fearful, I agree)

Yes, I agree both HTM and micro-financing are loans, but differentiated by borrowers. Bonds are also one type of loan. In AR2012, HTM financial assets are loan issued to "trust companies used in financing government-related bodies and corporations in China."

Since it is a loan business, risk management should be THE most important aspect. We should focus on its risk management and execution. So far the risk management plan is prudent and well structured IMO, and I didn't find any alarming sign on its execution so far.

From AR2012, page 24, illustrated the risk management policy. I captured key sentence here for easy reference. One effective way to track the execution is via impairment allowances and its utilization.

"It is our policy to insist on collateral to debt coverage ratio of no less than 2 times and the collaterals have to be unencumbered"

(vested)