ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

No deal for Yangzijiang....

http://www.seatrade-maritime.com/news/as...layed.html


Rongsheng yard yet to find buyer, restructuring delayed
By Lee Hong Liang from Singapore

Distressed China Huarong Energy Company, formerly known as China Rongsheng Heavy Industries, announced that a memorandun of understanding (MOU) over the sale of its assets and liabilities to a potential buyer has lapsed.

The MOU was effective until 30 June 2015, and the company and the potential purchaser have failed to agree to a deal.

Hong Kong-listed Huarong Energy entered into the MOU with the potential purchaser on 10 March, where the latter intends to acquire related core assets and liabilities of Jiangsu Rongsheng Heavy Industries, involved in shipbuilding and offshore engineering in China.

“The company and the potential purchaser are continuing the process of negotiation on the potential restructuring involving the potential transaction,” Huarong Energy said.

It added that Jiangsu Rongsheng Heavy Industries has obtained conditional letters of consent from all of its creditor banks relating to the disposal of its assets and liabilities.

“The group is now assisting the potential purchaser to establish an efficient and competitive professional core management team to enable Jiangsu Rongsheng Heavy Industries to enter into full production and obtain new orders immediately after completion of the potential restructuring,” it said.

While Huarong Energy’s statement did not mention the name of the potential purchaser, privately-owned Yangzijiang Shipbuilding has earlier confirmed its interest to own a stake in the troubled compatriot shipbuilder.

In April, Yangzijiang’s executive chairman Ren Yuanlin had said that the investment into the Rongsheng shipyard was not confirmed, as his company needed to closely study the terms and conditions of the sale and purchase agreement.

Chairman Ren, is a very shrewd businessman. I reckon YZJ is interested, may be the price isn't right.

(vested)

I agree with the analyst view, but dual-list in SEHK, is new to me. So far, nothing similar is heard in the grapevine.

(vested)

Yangzijiang kept at 'buy' with $1.62 target price by DBS Vickers

SINGAPORE (July 7): DBS ( Financial Dashboard) Vickers sees further upside by Yangzijiang Shipbuilding Holdings ( Financial Dashboard), on a combination of healthy order book, a potential dual-listing in Hong Kong, and “solid management” guiding the company through the on-going consolidation of the industry.

“As the largest and most cost-efficient private shipbuilder in China, Yangzijiang is amongst the handful Chinese yards that have waded into the high-end vessel space to battle their Korean rivals, and is well positioned to benefit from the post-consolidation recovery of shipbuilding markets, alongside shipping recovery,” writes analyst Ho Pei Hwa in a July 7 note.

The company is seen to have emerged stronger in the past few industry cycles and now sits on a healthy order book of US$4.6 billion, which provides clear earnings visibility, states Ho, who rates this stock a “buy” with a target price of $1.62. Year-to-date, Yangzijiang’s share has gained 16.6%.

“While the stock has done well, we see potential re-rating from probable dual-listing in Hong Kong to fund M&A,” notes Ho. “In addition, Yangzijiang offers a decent dividend yield of 4% or 5.5 cents per share on the back of stable earnings and cash flow.”

Ho’s sum-of-parts valuation is derived from eight time FY15 earnings on the shipbuilding businesses, 0.5 times price to book value for its bulk carriers and one times book value on the company’s investments. A 25% discount has also been applied on the net present value of a property project.

Ho cautions investors to watch out for possible depreciation in US dollars, where a one percentage point drop will lead to a two percentage point decline in earnings. There is also a possibility of an overhang from 330 million outstanding warrants expiring April 29 2016, which translates to 8.6% of outstanding shares if fully exercised.

As at 2.58 p.m., Yangzijiang shares traded at $1.40, down one cent.
http://www.theedgemarkets.com/sg/article...bs-vickers

The company share price has dropped by more than -7% in the last 20 days. I reckon it is due to the SSE stock market performance. May be a concern on the share collateral. Base on last disclosure in 1Q2015, the coverage ratio for share collateral was 2.8, which should have pretty wide margin.

(vested, and sharing a view)

(09-07-2015, 05:00 PM)CityFarmer Wrote: [ -> ]The company share price has dropped by more than -7% in the last 20 days. I reckon it is due to the SSE stock market performance. May be a concern on the share collateral. Base on last disclosure in 1Q2015, the coverage ratio for share collateral was 2.8, which should have pretty wide margin.

(vested, and sharing a view)

Hi CF,

I thought this to be a non-issue since YZJ is the creditor. I seriously do not think he will push those debtor companies whose shares price are already in the dogs for other modes of colletral.

Shares price is going to useless anyway when a default happen and YZJ holding of shares would most properly be worthless anyway.

As for HTM values, it is accounting maze, not actually affecting the operating cash flow of its HtM business.

Just my 2 cents thought. I stand corrected ..

(09-07-2015, 06:14 PM)Greenrookie Wrote: [ -> ]

(09-07-2015, 05:00 PM)CityFarmer Wrote: [ -> ]The company share price has dropped by more than -7% in the last 20 days. I reckon it is due to the SSE stock market performance. May be a concern on the share collateral. Base on last disclosure in 1Q2015, the coverage ratio for share collateral was 2.8, which should have pretty wide margin.

(vested, and sharing a view)

Hi CF,

I thought this to be a non-issue since YZJ is the creditor. I seriously do not think he will push those debtor companies whose shares price are already in the dogs for other modes of colletral.

Shares price is going to useless anyway when a default happen and YZJ holding of shares would most properly be worthless anyway.

As for HTM values, it is accounting maze, not actually affecting the operating cash flow of its HtM business.

Just my 2 cents thought. I stand corrected ..

More than half of HTM loans are current asset, so if coverage ratio isn't wide enough to compensate the market volatility, than it may constitute a real risk upon maturities.

A share is part of a company. It isn't a virtual asset, but a real asset. A loan default, doesn't always means worthless of the asset.

(vested)

Yangzijiang Shipbuilding Holdings Ltd - Increasing burden of over-owned vessels
Author: StockFanatic | Publish date: Fri, 10 Jul 2015, 12:50 AM

We expect continued downward pressure on YZJ's earnings amid weak BDI. The lack of new orders will be one reason, and the other will be its overowned bulk carriers. YZJ has 14 bulk carriers delivered from itself with nine more to come, while the vessels' freight rates remain below BEP. Efforts to change product mix could take several years to show meaningful figures, in our view. We remain Under Weight with a S$1.00 Price Target.

Read more »
http://singaporestockmarketnews.blogspot...rket+News)

(10-07-2015, 06:41 PM)Layman A Wrote: [ -> ]Yangzijiang Shipbuilding Holdings Ltd - Increasing burden of over-owned vessels
Author: StockFanatic | Publish date: Fri, 10 Jul 2015, 12:50 AM

We expect continued downward pressure on YZJ's earnings amid weak BDI. The lack of new orders will be one reason, and the other will be its overowned bulk carriers. YZJ has 14 bulk carriers delivered from itself with nine more to come, while the vessels' freight rates remain below BEP. Efforts to change product mix could take several years to show meaningful figures, in our view. We remain Under Weight with a S$1.00 Price Target.

Read more »
http://singaporestockmarketnews.blogspot...rket+News)

I am surprised by the focus on the shipping logistic and chartering biz. It is a very small part of the biz. It was put into "Others" segment, together with others. The overall "Others" segment constituted only <4% of overall revenue and profitable in FY2014.

I am more concern on the order book, than the "tiny" shipping logistic and chartering biz? The order book up to 1Q2015 is pretty healthy, IIRC

(vested)

(10-07-2015, 08:52 PM)CityFarmer Wrote: [ -> ]

(10-07-2015, 06:41 PM)Layman A Wrote: [ -> ]Yangzijiang Shipbuilding Holdings Ltd - Increasing burden of over-owned vessels
Author: StockFanatic | Publish date: Fri, 10 Jul 2015, 12:50 AM

We expect continued downward pressure on YZJ's earnings amid weak BDI. The lack of new orders will be one reason, and the other will be its overowned bulk carriers. YZJ has 14 bulk carriers delivered from itself with nine more to come, while the vessels' freight rates remain below BEP. Efforts to change product mix could take several years to show meaningful figures, in our view. We remain Under Weight with a S$1.00 Price Target.

Read more »
http://singaporestockmarketnews.blogspot...rket+News)

I am surprised by the focus on the shipping logistic and chartering biz. It is a very small part of the biz. It was put into "Others" segment, together with others. The overall "Others" segment constituted only <4% of overall revenue and profitable in FY2014.

I am more concern on the order book, than the "tiny" shipping logistic and chartering biz? The order book up to 1Q2015 is pretty healthy, IIRC

(vested)

yzj was been classified as rig builder by some of the research houses together with the likes of semb and keppel marine, when they are only building one and only one rig in their entire corporate life, and they also have made it clear that they are not building more. i guess the research analyst need to demo a sizeable list of counters to make a good story for o&g sector in the otherwise humble sgx.

This should be a personal investment of Mr. Ren, rather via YZJ...

(vested)

Boutique fund manager ICH Gemini launches private equity fund in Singapore

SINGAPORE (July 22): Boutique fund manager ICH Gemini says on Wednesday that it has launched a private equity fund in Singapore with at least US$110 million in capital that it will invest in mid-sized companies at growing or mezzanine stages.

ICH Gemini's anchor sponsor and director, Ren Yuanlin, who is also chairman of mainboard-listed Yangzijiang Shipbuilding Holdings ( Financial Dashboard), has committed US$100 million ($138 million) to the fund. The remaining US$10 million is from the fund manager's other two major sponsors - Vincent Toe Teow Heng, chief executive of ICH Gemini's parent ICH, and Xu Fan, a director at ICH.
...
http://www.theedgemarkets.com/sg/article...-singapore