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(10-12-2021, 06:02 PM)header Wrote: I took a quick look at their 2020 annual report and I have some concerns.
Firstly their debt investments are all in RMB. It means likely their portfolio is exposed to China property sector. They will be significantly hit this year? Their year-end is coming and I wonder is the announcement done with the year-end audit in mind?
From their 2020 annual report page 106, I noted there is major jump in their loss allowance provision on their debt investment, although as % of portfolio it is still small. Maybe 2021 will be another major increase in provision?
"Management has determined the expected loss rates by grouping the borrowers according to internal
risk management grading. A loss allowance of RMB539,549,000 (2019: RMB128,118,000) for debt
investments at amortised cost was recognised during financial year."
Hi header
Yes that is a risk that I believe investors are pricing in now. I think for you to be more clear on the risks, you should look at their presentation for Q3. They have significantly pared down exposure to the sector, leaving only 26% in real estate out of circa RMB10.9bn exposure. And if you look at their collateral base, a large part is land. This in my opinion is the safest form of collateral out of those listed. So one would not expect the 26% of real estate debt to be fully written off. Even if debt related to real estate is written down by 20%, it’s very much manageable.
One would also have to note the difference between what’s hogging the headlines in recent months versus what the debt investments that YZJ holds. The bonds that are the focus are offshore dollar bonds that are typically unsecured and in reality likely to be the most junior in terms of recovery due to China’s capital controls. It’s likely that some of these can get totally wiped out in liquidation or get very low recovery under a restructuring. This is why many of these bonds are trading between 20-30 cents to a dollar. This is totally different from the onshore secured debts that YZJ is holding.
I believe the headline news is part of the reason YZJ’s value is depressed as people worry over their debt investments exposure. However I believe these concerns are overblown due to the nature of their debt investments. Therein lies the opportunity to pick up an investment that I deem undervalued.
Please do your own due diligence. Any reliance on my posts is at your own risk.
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Tks for Squirrel. Will continue to explore as I do not know much about YZJ. Yes, risks & opportunities go hand in hand. Any views about the young man CEO? Not easy for him to fill his father's shoes I think.
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27-02-2022, 10:25 PM
(This post was last modified: 27-02-2022, 10:39 PM by Big Toe.)
1. Reported a blockbuster 2nd Half 2021 and propelled the full year to one of the best earnings ever in recent history.
2. Going to get better with deliveries of high margin container ships from this year on.
3. Foreseeable strong earnings for the next 2 years for YZJ. Also very very strong earnings thus far from container shipping companies, their customers.
4. Spin off of investment business is a huge bonus.
5. Very high cash hoard.
6. Decent Dividends.
7. Only risks I can see is high steel prices/pandemic getting out control in china and unforeseen legislation but they have since aligned themselves and contributed to "common prosperity".
8. What's it worth? With all things considered. very very much higher than $1.40(fri closing) for sure.
btw, I also think this year is somewhat special not only for YZJ but for many companies. You have the ongoing pandemic and if that is not bad enough, a dictator decided to start a war.
The last time both events happened was towards the end of the world war one, with the spanish flu. Between the deadly flu and war, the flu left more people dead.
Both extremely negative events happening at the same time, with singapore and major economies on a strong rebound. As far as SG listed companies are concerned, I do think many are way under valued including some blue chips and mid caps.
Happy hunting everyone!
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@ Squirrel. Hi, what's your breakdown of the valuation for YZJ Shiping and YZJ Financial? I am thinking of owning the shipping arm. Is current price of about 85ct fair or undervalued? I have followed you on Samudera, made a profit and exited. Thanks.
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(22-04-2022, 09:32 AM)Sumeria Wrote: @ Squirrel. Hi, what's your breakdown of the valuation for YZJ Shiping and YZJ Financial? I am thinking of owning the shipping arm. Is current price of about 85ct fair or undervalued? I have followed you on Samudera, made a profit and exited. Thanks.
Hi Sumeria,
Glad you acted on Samudera and made money off it. For YZJ shipbuilding, this is really a very subjective company to value. The reason is rather simple. Nearly none of the other competitors in the same sector are profitable! There is no basis to value this gem of a shipbuilder based on earnings. What you are buying into is probably the most efficient and profitable listed shipbuilder. And personally, that means it must at least command an earnings multiple in the teens. Additionally, in order to not accumulate cash again and have the same investment arm issue now, I do believe they will pay out more in dividends. The current price of $0.965 is not demanding from my perspective.
Please do your own due diligence. Any reliance on my posts is at your own risk.
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@ Squirrel. Thanks. Will wait for a bit of a pullback to buy. Technically, it looked a bit stretched in a market that is bearish.
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25-04-2022, 10:34 AM
(This post was last modified: 25-04-2022, 10:51 AM by Big Toe.)
YZJ is one of my core holdings so my opinion expressed is honest and very very biased at the same time. Some updates.
Previously there is no way to correctly predict how much market will value post spilit but now that the is half done, we have some clue. Also while the long term trends are in line with earnings and outlook, the short term share price moverments are very volatile.
Shipbuilding arm is currently valued at ard 1X book. Earnings is very likely to be good for Q1 and the rest of the year barring unforeseen events which was highlighted in previous post. Taking cue from what is happening right now, the financial arm is likely to be valued ard $1 as well. Taken together, YZJSB + YZJFH is about $2, which is slightly undervalued. The deep discount no longer exist but the prospects are still bright, especially for Financial arm which I am optimistic even with a lack of proper track record. The principal which investments they have carried out in the past is sound. It's a long game and we'll see how much YZJFH is valued in a few days and more importantly see where YZJFH ends up in a few years.
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