Yangzijiang Shipbuilding (Holdings)

[Greenrookie]

Being contrarion, I recenlty started taking interest in shipping industry as it has been in worst condition for last few quarters in more than two decades.

I specifically like this company due to its management (disciplined, shoreholder value creation attitude, operational execution excellence) and above industry everage margins, ROE/ROA and recenlty diversified businesses.

Looking at following few aspects, probability of integrity issue of financial statements should be very low.
- Most Transparent SIAS Investors Choice award last two years
- Mr. Ren awarded E&Y entrepreneur (hoping that E&Y has done due-delignce of company's financial statements)
- MR. Ren donated his significant shares to charity

However still above doesn't give guarantee the integrity of the financial statements especially this being Chinese company.

Being Chinese company, I am still scared about some possibility (may be very small) of integrity issue of its financial statements, especially looking at its huge HTM investment & micro finance. These assets are best way to hide dubious profit.

I have seen last few pages of this thread however no one discussing about this aspect.

Those who are associated with this company for long time, any thoughts would be appreciable. Thanks.

Looking forward to meet Mr. Ren in next AGM.

Hi Yogi,

There is no way to ascertain 100% the financial numbers are fraud proof.

But there are a few things which I take comfort with besides what you mentioned.

1) with the exception of 2011, YZJ is generating postive FCF from its core shipbuilding business since IPO.
2) Annual generous dividends, since IPO, they have already given 22.1 cents of dividends.
3) YOu can track their delivery of ships, signing of deals, even when they say the find new buyers for their vessels, you can check if it indeed happens through the reports, hellenics shipping website provide. In fact, there are times I know YZJ closed a deal earlier than YZJ announced them due to the weekly updates from that website. That you can compare the details and see if YZJ is up to some funky business.

I know HTM is a sore point, I myself have no way of verifying it. So you have to decide if the risk is worth it.