Yangzijiang Shipbuilding (Holdings)

[CityFarmer]

YZJ is an alpha stock in the shipbuilding industry. But it isn't, outside the shipbuilding industry. If there is extra cash, conservatively it should be returned to the shareholders (especially if you are the major one, who will benefit) or a lateral expansion into parallel industries within the reach of your competitive edge.

IMO, the cash reserve, is one of the key reasons, the company is surviving well amid the storm. Who else can be trusted, to complete a project on schedule with quality now, for those serious shipowners?  

A wind-fall of big dividend is good as OPMI, but not so if it jeopardize the survival of the company.

The company has seriously considered a M&A with Rong-Sheng Shipbuilding, but walked-away due to debt issue. I concured with Mr. Ren's decision, otherwise the new subsidiary might drag down the parent. Based on last info, the M&A is still possible, after the debt issue is solved or waived somehow.

http://www.newsmaritime.com/2015/marger-...o-failure/

(vested as core)

[shadow_walker]

Behappy posted quite a few good articles about China in another post which is reflective of China's plight imo. I am in the camp that China is indeed in a very bad debt bubble and am curious to see how much haircuts banks/financial lenders will have to take.

Basically, a lot of corporate debts in China are as good as gone due to overcapacity in steel/coal/shipbuilding/unsold properties and many companies are unable to repay the principal. Some province govt have resorted to forcing the lenders to take haircuts. With YZJ having so much financial assets, it is important for us to relook into its type of investments. For YZJ, impairment of financial assets is a definite scenario.

"Participation in consolidation of traditional industries and restructuring of state-owned enterprises" is equivalent to national service in China.

Consolidation of traditional industries is the supply-side reform that Xi has been pushing since May 2016 after the person of authority's article. It has been ongoing at quite a fast pace in China with a number of companies closed down. The 276 days production limit has also pushed up coal prices and import in China. Coincidentally, the fund was set up in late Jun 2016.

Restructuring of SOEs is likely to be debt to equity swap and restructuring of the dying non-central government-owned SOEs. It is also very difficult to buy a SOE for less than 1x PB in China, so any restructuring done by YZJ is unlikely to be the kind that the AMC is able to do. The restructuring for the better SOEs will be in the form of consolidation and M&A to make them bigger and stronger, unlikely the task that YZJ as a private company will do.

It is a fair trade-off since YZJ benefitted from the shipbuilding subsidies provided by the Chinese government for ship-owners to order new ships in China. The 30 Valemax orders are likely to be a concession by Vale in return for the approval to dock the valemax at Chinese's ports. That's how the PRC govt has been supporting the shipyards, which employs significant workforce. Order cancellation in the industry is high with 52% delivery slippage for dry bulk in 1H16 and many of these are from the Chinese yards.

http://www.businesstimes.com.sg/companie...nt-vehicle

"JNIHCO chief executive Hu Yin said in the release that the newly set-up investment holding company will anchor on four business platforms: building up an integrated financial services network; participating in consolidation of traditional industries and restructuring of state-owned enterprises; providing institutions and individuals with asset and wealth enhancement services; and facilitating international mergers and acquisitions."

[cif5000]

Yes. I can see that the amount of HTM is lower....scaling down.


FY2013 RMB14.7B
FY2014 RMB11.7B
3Q2015 RMB9.7B

2Q16 11,661,617

I guess they will take some HTM off balance sheet and put them into the newly incorporated "asset management and investment platform". Keep watching.

http://infopub.sgx.com/FileOpen/Announce...eID=410328

[Greenrookie]

Yes. I can see that the amount of HTM is lower....scaling down.


FY2013 RMB14.7B
FY2014 RMB11.7B
3Q2015 RMB9.7B

2Q16 11,661,617

I guess they will take some HTM off balance sheet and put them into the newly incorporated "asset management and investment platform". Keep watching.

http://infopub.sgx.com/FileOpen/Announce...eID=410328

I initially thought so too.

But now I think otherwise, I think it should be a vehicle "for government push to restructure the shipping sector and shadow banking"

Restructuring of the "zombie yards, steel mills" through creative engineering and "private burden sharing"

But luckily, YzJ only have a 11% stake. The business structure is still unknown, it should most likely be a "dumping ground or swapping ground" for bad assets, hopefully Ren can navigate this to its advantage too

(Vested)

[cif5000]

Yes. I can see that the amount of HTM is lower....scaling down.


FY2013 RMB14.7B
FY2014 RMB11.7B
3Q2015 RMB9.7B

2Q16 11,661,617

I guess they will take some HTM off balance sheet and put them into the newly incorporated "asset management and investment platform". Keep watching.

http://infopub.sgx.com/FileOpen/Announce...eID=410328

I initially thought so too.

But now I think otherwise, I think it should be a vehicle "for government push to restructure the shipping sector and shadow banking"

Restructuring of the "zombie yards, steel mills" through creative engineering and "private burden sharing"

But luckily, YzJ only have a 11% stake. The business structure is still unknown, it should most likely be a "dumping ground or swapping ground" for bad assets, hopefully Ren can navigate this to its advantage too

(Vested)

Not a bad idea at all. So why stop at 1 dump? 

This 11% associate can absorb "assets" from others and the "beneficiaries" can in turn create similar vehicles for YZJ to do the same thing. Mutual scratching of backs. Suddenly everything can go off-balance sheets.

[desmondxyz]

Yangzijiang sold back 15% share in PPL shipyard to Sembmar at ard the same price it paid for it few years back. This should end yangzijiang adventure to oil rig business.

http://infopub.sgx.com/FileOpen/YSHL%20A...eID=418572

[opmi]

$115m cash buys more now in offshore market than a few years back.

With no orders, those offshore rig designs worth lesser now. I guess.

[desmondxyz]

$115m cash buys more now in offshore market than a few years back.

With no orders, those offshore rig designs worth lesser now. I guess.

It's USD 115m. Yangzijiang effective equity interest of 45% worth USD 51.8m. 

Not sure why Sembmar still willing to pay so much for that 15% share.... 

[opmi]

$115m cash buys more now in offshore market than a few years back.

With no orders, those offshore rig designs worth lesser now. I guess.

It's USD 115m. Yangzijiang effective equity interest of 45% worth USD 51.8m. 

Not sure why Sembmar still willing to pay so much for that 15% share.... 

It is good strategy to buy rig design during downturn. I think Keppel FELS bought over Freide Goldman rigs design back in 2000s.

[CityFarmer]

The company bought the equity share in 2010, with ~US$ 52 mil, and sold with US$ 115 mil, both in cash. Not a bad deal.

PPL shipyard, seems performing well since the acquisition, with total accumulated dividend of RMB 158 mil in the last 5 years to the company, or average 32 mil RMB per year (US$ ~5 mil per year). The disposal is at slightly more than 4% dividend yield, a pretty fair deal indeed.

(vested as core)