Yangzijiang Shipbuilding (Holdings)

[CityFarmer]

...
So, I guess we have 3 scenarios

1) case dismissed after legal challenge or investigation

2) Ren gets away with the alleged illegal profits confiscation and a fine. No criminal prosecution.

3) Ren gets criminal persecution and company is banned from
Involving in HTM trades.

So whether YZJ is a steal or falling knife depends on which is the likely scenario. If it is 1), u get a smart rebound.

2) impact is hard to justify

3) will mean a very severe write down in the company's HtM assets.

Will trading be halt pending the 3 outcomes is anyone guess.

I don't intent to read from 3rd parties news reports. Speculative news reports are in high demand now.

I do focus on direct comments from related parties. May be one article in ST today, which the reporter has directly clarified with YZJ CFO.

Would you mind posting the article here for the benefit of fellow valuebuddies?

It is ST article, the content is the same as GG post #399 on CIMB. Obviously the source of the info is same for ST news reporter.

[ValueMaster]

avoid S-Chips at all cost, YZJ will likely to be a Sinking Ship for sure
why pay 8 times earnings for so much risk
when you can pay 12 times earning for kep corp semb corp?

[CityFarmer]

Mr. Buffett's quote of "Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” is easy to understand, but difficult to execute.

I don't intent to convince anyone here.

I am listening, and always re-examining my YZJ story with new input(s). Some are pure noises, some have their valid point, but clearly biased, some good experiences were shared.

I will still stick to my story. I might not be right, and hopefully it can be a successful case of "Greedy When Others Are Fearful"

[pianist]

cant imagine him staying in hotel81..just read the article

[yeokiwi]

The three agreements that were signed between 成清波 and 任元林.

http://www.cninfo.com.cn/finalpage/2014-...069606.PDF

As a listed company, can these kind of agreements be signed without informing the rest of the shareholders?

The main accusation is based on the following paragraph:

甲方: 成清波
乙方: 任元林

5.在约定的回购期间和甲方受乙方委托行使标的股票股东权利期间，甲方必
须确保天津国恒始终处于盈利状态（以上市公司披露的报表为准）；乙方有权派
员或委托会计师事务所定期和不定期对天津国恒进行财务审计，甲方必须给予积
极配合；对于天津国恒 2013 年度财务决算和财务会计报告书编制必须有乙方人
员参加并会签，同时甲方必须确保天津国恒 2013 年度盈利和在经乙方同意的情
况下，才能提交给上市公司会计师事务所进行年度会计报告审计。否则乙方有权
随时取消甲方对标的股票的回购权，同时有权立即收回委托甲方行使的一切股东
权利。另外，如果标的股票股价连续 3 个交易日下跌，或跌至 1.5 元/股以下，乙
方有权立即取消甲方对标的股票的回购权，同时有权立即收回委托甲方行使的一
切股东权利。

[HoHo]

Thanks for above posting, my understanding is that 成清波 want to expose this scheme and perish(同归于尽) with 任元林. Since this is illegal, both of them will be punished, right?

Bro GG, of course they tell you don't be alarmed, how you expect them to shoot their own foot? Around half of yzj net profit came from structured products, this segment is bound for BIG TROUBLE. 50% is alot especially the China govt already wanted to clamp down such illegal lending practice.

[weijian]

http://nextinsight.net/index.php/story-a...-high-life

(Not Vested)

I cannot help but wonder at how young the CFO was (33 years old in 2009). A quick search revealed that she joined as deputy CFO in June 2008. She must have had some connections or simply a wunderkid, to become CFO of a 1.5billion market cap company at a pretty tender age of 33 years old.

[greengiraffe]

http://infopub.sgx.com/FileOpen/Yangziji...leID=20568

I have to once again declared that I have no Vested Interests and my aging experience may no longer be relevant to the current market dynamics as the current analysts may have visited YZJ's facilities and have a better understanding than a expired desktop analyst.

I had a good review of the latest annual report 2013:

i) earnings at YZJ peaked in 2011 but dividends have been maintained, hence payout has risen
ii) strangely enough, earnings and asset exposure from financing activities have risen and management has clearly indicated that they will continue to raise exposure in this area with tighten risk management. In addition, they have also diversified into real estate development
iii) on point ii), one can stretch their imaginations that the strategies is somewhat similar to say a Keppel Corp here. However, I urged caution here since Keppel's conglomerate and diversified activities were build up within Singapore's colonial based legal framework. China in my mind has their own legal system which continues to evolve but remains quite confusing to many foreigners. Anyway for info, Keppel Corp got into banking as it was the last Singapore Inc to be issued with a banking license (even HL Group failed to secure one) while Keppel Land was formerly known as Straits Steamship and was acquired with a little history behind.

As in previous threads in recent months, there were already red flags on the state of China ship building industry - Rongshen, Cosco and even JES - all reporting very tough conditions due mainly to excess capacity in China and rising labour costs. As it stands, YZJ is a bright spot in a sea of "red" and hence it is quite natural for analysts covering the stock to accord it favourable ADD/BUY ratings.

However, in view of the declining net profits since 2011 (notwithstanding sustained dividend payout) and its strong diversifications into non-core businesses such as financing (very likely shadow banking style financing) and property development (on macro basis not view positively), it is sufficient "Red Flags" to GG.

I do not think there is anything wrong to make money from the corporate point. However, diversification usually come about as a result of toughening conditions within the traditional core. To add to the concerns, to be involved in financing without "proper licensing" or mainstream "banking license" can be a high risks activity. Since the rates being charged are high to compensate for the risks involved, there is no stopping from authorities to clamp down such legalise activities should it be deemed to against social harmony or deemed to encroach the traditional banking businesses.

I really don't know since China is so big and my mind has been badly poisoned by all sorts of bad news from China in recent memory.

I maintain my call: Extreme caution warranted.

Not Vested
GG

[Greenrookie]

The three agreements that were signed between 成清波 and 任元林.

http://www.cninfo.com.cn/finalpage/2014-...069606.PDF

As a listed company, can these kind of agreements be signed without informing the rest of the shareholders?

The main accusation is based on the following paragraph:

甲方: 成清波
乙方: 任元林

5.在约定的回购期间和甲方受乙方委托行使标的股票股东权利期间，甲方必
须确保天津国恒始终处于盈利状态（以上市公司披露的报表为准）；乙方有权派
员或委托会计师事务所定期和不定期对天津国恒进行财务审计，甲方必须给予积
极配合；对于天津国恒 2013 年度财务决算和财务会计报告书编制必须有乙方人
员参加并会签，同时甲方必须确保天津国恒 2013 年度盈利和在经乙方同意的情
况下，才能提交给上市公司会计师事务所进行年度会计报告审计。否则乙方有权
随时取消甲方对标的股票的回购权，同时有权立即收回委托甲方行使的一切股东
权利。另外，如果标的股票股价连续 3 个交易日下跌，或跌至 1.5 元/股以下，乙
方有权立即取消甲方对标的股票的回购权，同时有权立即收回委托甲方行使的一
切股东权利。

Hi YeoKiwi and CF,

I read through the original agreement: (the 046 report)
http://www.cninfo.com.cn/finalpage/2014-...069606.PDF,

the terms of conditions include (pg 6)
3.甲、乙双方一致同意遵守保密义务，不将本协议内容透露和泄露给第三方，
否则违约方将赔偿因此给对方造成的损失。

There is condition of secrecy, hence minority shareholder are not awared. Hmm... Isn't 成清波 shooting himself?


Next:
2.在约定的回购期间内和甲方拥有回购权的情况下，甲方应当认真履行基于
《授权委托书》的股东权利，切实维护天津国恒权益，如果甲方不认真履行基于
《授权委托书》的股东权利，有可能致使天津国恒股票停牌或摘牌，或连续股价
下跌和发生其他损害天津国恒权益行为，造成天津国恒和乙方经济损失，则甲方
应当承担赔偿责任。同时乙方有权立即取消甲方对标的股票的回购权，同时有权立即收回委托甲方行使的一切股东权利。

If that is the case, the third accusation （三）涉嫌侵犯上市公司独立运作
Doesn't hold, isn't it?
http://www.cninfo.com.cn/finalpage/2014-...943086.PDF
They are making a loss

http://www.cninfo.com.cn/finalpage/2014-...952066.PDF
Company suspended on 5 May

Also, since the shares are transferred to TaiXingLiyuan, TXLY is effectively the biggest shareholder with management rights, but because 成清波 has the rights to repurchase the shares, TXLY thereby gave management rights to 成清波 and co, subjected to various conditions, apparently, the profitability and no suspension conditions are not meet.

The crux of the argument is insider trading, the buying of shares after the agreement is sealed. I read the document a few times, I couldn't find a clause that stated YZJ cannot buy more of Tianjin GuoHeng Railway.

Also, the harsh conditions of profitability, no lower than $1.5 etc, are merely conditions, does it constitute as insider info? There is no guarantee of profits.

（四）涉嫌违规获得上市公司股权
在股权回购协议之补充协议中规定：“相关方配合深圳市中级人民法院通
过强制执行，最终以大宗交易方式将标的股票过户至丙方名下”。公司认为，
国联信托作为新扬子公司的高息放贷渠道，是泰兴力元的关联方。泰兴力元在
债务人配合下，通过大宗交易而非公开拍卖的方式获得质押给关联方的股权，
侵犯了公司其他股东的优先受偿权，侵犯了其他债权人的溢价拍卖获益权，剥
夺了上市公司通过其他方进行重组的可能。

Accusation 4 (Above)is even more bewildering.
3.《股票回购协议》签订后，协议当事人最终确定通过深圳市中级人民法院
将标的股票以大宗交易方式过户至泰兴市力元投资有限公司。 (pg8)

I assume 大宗交易 means married deal, that was agreed during the supplement contract, when TXLY come into the picture.


------------------------

I am not a lawyer, but if I can find so many question marks, it does not seem like Ren will just lose the legal battle when it starts.

(Divested, but still interested)

[HoHo]

Bro GR, things are not so simple, now 成清波 want to expose this scheme and perish(同归于尽) with 任元林, 成清波 himself is a very trustworthy confession and powerful witness against 任元林. Don't see everything from this piece of agreement. Both men may go to jail.