Yangzijiang Shipbuilding (Holdings)

(15-06-2016, 11:30 AM)CityFarmer Wrote: Early sign of a shipping sector recovery?

Singapore port notches year's first rise in box throughput
15 Jun 2016 09:00
By Tan Hwee Hwee

TOTAL container throughput in the Port of Singapore rose in May compared to May a year ago, in the first year-on-year rise since the start of this year.

Preliminary estimates released by the Maritime and Port Authority (MPA) of Singapore show that the port handled more than 2.665 million 20 foot equivalent units (TEUs) of containerised cargo last month, up from 2.622 million TEU in May 2015.

The container throughput for the month was also higher than that for April, at 2.528 million TEU.
...
Source: Business Times

Hehehe, when I read this news article, HPHT instead of Yangzijiang come to mind

The new alternative segment of the company, is moving from HTM fund, to investment holding...

Yangzijiang Shipbuilding injects one billion yuan into Chinese investment vehicle
27 Jun 2016 19:47
By Tan Hwee Hwee

YANGZIJIANG Shipbuilding (YZJ) will inject one billion Chinese yuan (S$204.46 million) through a wholly owned subsidiary into an investment holding company in Jiangsu, China.

YZJ said that Jiangsu Yangzijiang Shipbuilding Co has entered into an agreement with several partners to establish the first non-state-owned investment holding company in Jiangsu with 8.6 billion yuan of registered paid-up capital.

Jiangsu Yangzijiang will subscribe to 11.63 per cent equity interest at one billion Chinese yuan as a co-founder in Jiangsu Non-state-owned Investment Holding Co (JNIHCO).

Three partners named in the disclosure to the Singapore Exchange (SGX) on Monday are state-owned enterprises Hodo Group, Shagang Group and GCL Group.
...
Source: Business Times Breaking News

http://infopub.sgx.com/FileOpen/Announce...eID=415785

Results released late in the evening normally make for unpleasant reading and this is no exception.

A brief summary of the bad news.

Expected:
1) Revenue declines year on year but up compared to q1.
2) Increase in impairment provisions on HTM assets.

Unexpected:
1) HTM assets continuing to increase in this quarter.
2) Increased proportion of HTM assets collateralised by "others".

I think looking at their operating numbers, YZJ has outperformed the sector pretty nicely. It remains an alpha stock in my opinion, but just buying alpha is foolhardy. When the sector turns then it will be time to look at alpha.

Their HTM will continue to haunt them for some time cause the chairman has been "too" savvy. But I wish they can provide more clarity on that front to improve confidence as the persistently high figure may indicate a "rollover".

(29-08-2013, 12:34 PM)specuvestor Wrote: IMHO I think YZJ is an alpha stock in shipbuilder when we see the likes of Rongsheng, and getting out unscath with Wenzhou blowup. Most importantly still paying good dividend so there is cashflow and not just paper. But taht also means that I have to be positive on the shipping industry to buy this alpha stock.

Problem is, we need to value part of it like a finance company which I see very little discussion from the broking community. Valuing Courts as a consumer product company would have missed the point.

(02-10-2013, 02:14 PM)specuvestor Wrote: There was significant arb opportunity between offshore and onshore rates 6 years ago. Cost of funding was much lower offshore as people expected RMB to appreciate. That precedes the Chinese property companies raising dim sum bonds.

Unlikely you can see any info on the B/S because those are considered treasury operations, could be just classified as derivatives or hedges. Interesting that u mention the HTM are also 6 years ago. I got to look more in detail to satisfy my own curiosity.

Anyway my point is that the guy is very savvy. I was worried he was spending time doing something non-core and might blow-up. And that's 6 years ago and counting

(05-08-2016, 11:34 AM)specuvestor Wrote: I think looking at their operating numbers, YZJ has outperformed the sector pretty nicely. It remains an alpha stock in my opinion, but just buying alpha is foolhardy. When the sector turns then it will be time to look at alpha.

Their HTM will continue to haunt them for some time cause the chairman has been "too" savvy. But I wish they can provide more clarity on that front to improve confidence as the persistently high figure may indicate a "rollover".

The HTM asset has been reducing over the last two years. The asset has increased over the last 2Q, might due to spare cash received from the last property asset disposal.

(vested)

The company, is doing well, and well-prepared for the sector recovery, whenever it might be.

- The company's yard utilization is well-optimized and staying around 80% (based on a recent interview, but I lost the link)
- Margin is well-maintained, with flexible cost structure. Key staffs have been maintained, with a relatively stable staff expense. It is a key for quick catch-up with sector recovery. The laid-off was mainly on contracted staff.
- High cash reserve, for M&A, and capacity expansion when sector recovery occurs.
- Low order-cancellation rate, and company always managed to find new owners. It shows company is still able to get quality contracts
- The company is also having R&D, on potential next trends, e.g. LNG ship, and greener container-ships, and bulk carriers
- Dividend, is likely maintained about the same, in near future.

Isn't it a perfect situation for a recovery if at right price? The biggest doubt, is when will the recovery? Mr. Ren forecasts, at least two years later.

(vested)

Yangzijiang Shipbuilding is a ‘survivor’

SINGAPORE (Aug 10): DBS says Yangzijiang Shipbuilding is well-positioned to emerge stronger from the shipbuilding downturn.
...
http://www.theedgemarkets.com.sg/sg/arti...r%E2%80%99

(10-08-2016, 12:05 PM)CityFarmer Wrote: The company, is doing well, and well-prepared for the sector recovery, whenever it might be.

- The company's yard utilization is well-optimized and staying around 80% (based on a recent interview, but I lost the link)
- Margin is well-maintained, with flexible cost structure. Key staffs have been maintained, with a relatively stable staff expense. It is a key for quick catch-up with sector recovery. The laid-off was mainly on contracted staff.
- High cash reserve, for M&A, and capacity expansion when sector recovery occurs.
- Low order-cancellation rate, and company always managed to find new owners. It shows company is still able to get quality contracts
- The company is also having R&D, on potential next trends, e.g. LNG ship, and greener container-ships, and bulk carriers
- Dividend, is likely maintained about the same, in near future.

Isn't it a perfect situation for a recovery if at right price? The biggest doubt, is when will the recovery? Mr. Ren forecasts, at least two years later.

(vested)

Yangzijiang Shipbuilding is a ‘survivor’

SINGAPORE (Aug 10): DBS says Yangzijiang Shipbuilding is well-positioned to emerge stronger from the shipbuilding downturn.
...
http://www.theedgemarkets.com.sg/sg/arti...r%E2%80%99

I am watching YZJ closely, for its well executed move up of technology value chain as well as the ability of Ren.

However, I think the results are not as good as what the report suggest, I can't remember the link but I read 

The rig is completed and laid up at Taichang yard. (Not a big deal, every O&G company going through that but it is not highly publicized)

The trading business of becoming their own charterers, I wonder if the "bad news of cancellation", are this arm also considered as "buyers"? I hope not 

HTM is still increasing, colleterals higher in "orders", govt-linked is no comfort in my opinion 

Unless they increase payout ratio, which i think they have to, otherwise I doubt they can maintain 4.5- 5 cents dividends

But despite all these, I agree that the risk ratio is getting better with its plummeting price

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.

(11-08-2016, 11:15 AM)CY09 Wrote: 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.

So far what I have seen, SOEs are been called to do "National Service" (China style) and bail out the chosen private investors. They are mainly WMC products that went belly, either issued, guaranteed or brokered by SOE banks. These banks are the main ones taking the hit, but they have deep pockets (high savings rate) and PBOC always ready behind to print more to repay their yuan-denominated debt.

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.

Of course, when times were good, it looked smart and all of us (me included) praise Chairman Ren for his ingenuity to achieve a high ROE for everyone.