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YZJFH - potentially rewarding
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kcs1107
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24-Jul-2022 09:50
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Why Western Media predictions on China were mostly wrong in past decade??&lsquo Ideological bias, problematic political science&rsquo cause failed forecast.When commenting on China, some in the West only see a country constantly at the cusp of crisis, ranging from predictions of a " China hard landing" or " China collapse," to " COVID is China' s Chernobyl moment" and " the end of Communist Party of China' s (CPC) rule." Over the past decade, whenever China encountered difficulties and challenges, some Western politicians, scholars and so-called China experts always repeat wild prophecies about the fate of China and the CPC. Needless to say, none was even remotely right. Far from it, China under the leadership of CPC has overcome various challenges, become stronger than ever and is closer to the center of the global stage than ever. Even under the impact of the COVID-19 pandemic, China has showed a much better performance than the West in saving lives and controlling the epidemic since the beginning, and its economic growth is still faster than most major economies, Chinese experts said. The wrong predictions about China in the past decade have shown an interesting trend of Western understanding of China: from downplaying China' s development and exaggerating the problems that China has, to recognizing the fact of China' s rise, and now to the anxiety of how to deal with a powerful China with a unique political system and culture that is very different from the West. In other words, from the China Collapse Theory to the China Threat Theory, said analysts. The " China collapse theory" is a typical example of wrong Western predictions about China, and there are quite a number of Western scholars who used to or still hold these opinions. A representative prediction of such kind was made by Francis Fukuyama in 2012: China' s top-down political system, under pressure from a growing middle class empowered by wealth and social networks, is likely to blow up at some point. " China has always been a country with a big information problem where the emperor cannot figure out what is going on at a grassroots level" [&hellip ] and " this is in so many respects exactly the Communist Party' s problem. Because they do not have a free media, they do not have local elections, they cannot really judge what their people are thinking." Fukuyama is not alone in this regard. There were some other " famous" Western proponent of the hilarious theory that used their biased knowledge to predict China' s course in the past 10 years, such as when former US secretary of state Hillary Clinton said in 2011 that the " Chinese system is doomed." In an interview with the Atlantic, Clinton said Beijing' s human rights record is " deplorable" and it is " trying to stop history" by opposing the advance of democracy. Gordon Chang, a " well-known" " China Collapse" theory fanatic, has frequently prognosticated on " China' s collapse," but despite all indications to the contrary, he just kept changing the time of the " collapse" again and again. Why do Americans want the CPC out, when in fact the CPC and vested interests is what is keeping China from advancing ahead of the USA?Why do Americans want the CCPC out, when in fact the CCP and vested interests is what is keeping China from advancing ahead of the USA?Some years ago before the global financial crisis, I began to develop a habit of grinning at almost every piece of supposedly serious journalism on China, whether it was Time, NYT, or the Economist. I was oblivious to the surrounding and subconscious bubbling to the surface until my friend asked worriedly &ldquo why are you smiling at the laptop?" " Many Chinese including myself came to the realization I was reading about China in English" , and it was a far different picture from the one painted in Chinese, a rusty language I had brushed up in my two years stateside.I was tickled by the absurd gap between the two, further reinforced by the dismantling of the China in my mind with the reality of modern China I had witnessed with my own eyes. I have slowly come around to the conclusion that the freedom loving west loves communist China for the same reason they hate her.I kid you not.You see, the west loves doing business with China because she is huge and delivers.But the west also hates competing with China because she is so massive but delivers. The west used to dismiss and laugh off Chinese competition.Today, they still dismiss Chinese efforts, but there is no laughter. The rhetoric is designed to stir up anger instead.China delivers, but that is because the evil communists government has turned the poor Chinese people into a monolithic army of spying zombies.Anyone who wakes up from the zombie apocalypse will be caught and delivered to Tiananmen square to die under passing tank tracks. Evil must be opposed.Cue heroic music and the entrance of the white hero with guns blazing to save the day.On a more serious note, the CCP leadership over the past 70 years since its founding has led China from an agrarian, feudal, war-ravaged and exhausted society to a confident, peaceful and modern nation state that has landed on the far side of the moon and launched her own Beidou GPS system with global coverage. China is behind because she squandered a century and three generations whilst the west industrialized.She is closing the gap, because a stable China at peace is a formidable proposition.Why are there protests in China right now? Something about a bank?How it began. In Henan Province - Four Banks - Primarily Rural Farmers Banks misused Peoples money and made bad fraudulent investments.Normally they gambled on the fact that Chinese rarely dipped into Life savings - and so they could recover it fast and make it up Sadly COVID 19 happened and People panicked and began to rush to the bank to withdraw their money.Of course when there is a Panic to rush to withdraw their money - no bank can have the cash to pay the depositors. Even if its the safest bank in the world. Most of the money is loaned out.So under normal circumstances the Banks will appeal to the Monetary Authority (China Central bank in China, RBI in India) for emergency cash.Foreign exchange reserves in China declined only $56.5 billion to $3.071 trillion in June of 2022, the lowest since March of 2020 and compared to market forecasts of $3.113 trillion, mainly due to general dollar strength amidst aggressive Fed' s tightening expectations and looming recession risks. Meanwhile, gold reserves fell to $113.82 billion at the end of June from $115.18 billion at the end-May.It must be noted that Trillions bond is kept in reserve with Treasury of USA.So,even a trillions short Gap problems cannot be an issue for China when America haven debt of 30 Trillions!!   
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fatpig
Senior |
24-Jul-2022 08:49
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China finacial crisis - https://youtu.be/N57doBGQTNY | ||||
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volvo125
Master |
23-Jul-2022 13:28
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Lidopoint holding in yzj and yfh is equal in numbers due to the 1:1 spinoff. All these shares (~10% of yzj float and also ~10% of yfh float) have been pledged to a Trust yo fund employee rewards. Nobody can sell any shares in the Trust except the consensus decision of the committee, which is independent of the Wang and Ren families.
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volvo125
Master |
23-Jul-2022 12:58
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Lido point shares were originated from Wang Dong, a co-founder of yzj. Uncle Ren is the main founder. Ren and WangD are Abang Adik, die die won't sell. WangD already pledged all the ~10% holding to a Trust and the yoy returns (dividends) will be used for employee rewards for yzj (and likely for yfh too).
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volvo125
Master |
23-Jul-2022 12:50
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Yes ... which is why I read that while TR wanted an exit, it has no intention to run down YFH price. It is in the interest of TR to conduct the long disposal exercise at as high an average price as possible within its disposal schedule in order to maximize its cash proceeds back. The exit seems orderly so far although the continuous and huge daily disposal volume will still inevitably push the price down. Hopefully the disposal is nearing the end ....
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ss2017.
Supreme |
23-Jul-2022 12:33
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It seems Lido point investment is more affiliated with yzj mgt. Holding similar amount of shares in yzjsb and yzjfh. Well done. | ||||
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ss2017.
Supreme |
23-Jul-2022 12:06
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Over last 3 weeks or so, price range fluctuated within 3c, therefore keep investing for a better return.
I think foreign fund house has shared different value with yzjfh mgt. May be a crash in value. Departing is a natural process. Let them reduce holding further but i think they are valued investors they should see yzjfh has full potential ahead. |
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GoldenPig
Veteran |
23-Jul-2022 11:37
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OIC.
So long as YFH is delivering on its targeted returns and dividend yield, it is still attractive to dividend investors. The price being depressed for whatever reasons is actually good for them as they can keep investing into it. Of course for short or long term investors who are more focused on capital gains, they will be upset if prices are depressed for a long time. Right now, the price is kept within a very tight range. Not much opportunity also for traders to play on the price spread.
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volvo125
Master |
23-Jul-2022 10:54
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TR is an ultra big angmoh US fund mgr and is exiting. I think there is little SGX can do if TR boh chap and skipped all the reporting hassle. Further, there are too many listco and SSH selling or buying stakes daily, it is difficult for SGX to look into the details. We investors will just have to screen the details more closely. By the way, once TR holding fell below 5% or 197mil shares, TR will no longer need to report.
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fatpig
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23-Jul-2022 10:42
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TR (Rowe) could be holding on behalf of someone (They do offer this service). Cash out $ from China is the main objective (Large amount of Shares). SBB just to CON retial share holders to buy.
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GoldenPig
Veteran |
23-Jul-2022 09:21
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You might be right. I just wonder how come major shareholders can get away with not reporting all share disposals? Thought there' s some SGX rules on that. Also wonder why SGX did not query on the gaps in the shareholdings for the 2 disposal reports.
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volvo125
Master |
23-Jul-2022 02:55
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I have this observation. While I cannot exactly confirm but I think it has happened and is still happening. YFH deep and persistent sell off in the past weeks are not exactly due to shorts. There were Shorts, but they only participated on a peripheral basis riding on the main Seller TR (Rowe). 1) If you check the Circular for SBB mandate dated 24 May, TR holding was 295.981mil (7.5%). TR 1st disposal report (mandatory as SSH > 5%) to SGX dated 28 Jun, disposed [email protected], holdings dropped from 277.86mil to 269.28mil. Question :- what happened to the gap between 295mil~277mil ? There was a disposal of 18mil but TR did not report to SGX. TR 2nd disposal report to SGX dated 5 Jul, [email protected], holdings dropped from 238.59 to 233.497. Question :- what happened to the gap between 269mil to 238mil ? There was a disposal of 31mil and TR also did not report. 2.1) If you check the latest MAS short reports dated 8Jul and 15 Jul, You will realise the Shorts outstanding for YFH has already come down to quite a low level since 6 May at its height. 6 May - 33.7mil shares or 0.85% of float. 8 Jul - 12.9mil shares or 0.33% of float 15 Jul - 14.74mil shares or 0.37% of float YFH outstanding shorts came down significantly during the period immediately after spin off to 15 Jul MAS latest report. Accumulated outstanding shorts were only 14.74mil to date 15 Jul. 2.2) Now compare with YZJ immediately after the spin off :- 22 Apr - 40.8mil or 1.03% of float (Just before spin off) 6 May - 71.1mi or 1.8% of float 8 Jul - 108.4mil or 2.74% of float 15 Jul - 96.8mil or 2.54% of float YZJ outstanding shorts increased from 1.03% just before spin off to 1.8% immediately after spin off and further increased to 2.54% on MAS latest 15 Jul report. YZJ was the one that was being heavily shorted on, not YFH. In fact, if you look through the MAS short report, you will realise only a handful of coy has short outstanding ~2% (SIA, Frenken, EZRA-suspended ..). In fact, anything higher than 1% outstanding shorts is likely considered as high. 3) So the persistent sellings in YFH are not likely due to Shorts effect but someone(s) with a significant amount of shares to dispose. Shorts just added to the fuel. TR disposed 62mil shares by 1 Jul (from 299mil to 233mil) and only reported twice (5.17+8.58 = 13.75mil). TR did not bother to report, and I read that TR was planning to further dispose (may be all) the 233mil from 1 Jul, and this explains why we are seeing so many weeks of huge volume and persistent selling while the shorts outstanding actually remain quite low. TR could really be selling for various reasons not neccessarily mean YFH biz is in trouble. a) TR is a long time SSH of YZJ due to the Shipbuilding biz, and not the DI or fund/wealth mgt biz. b} capital flight due to USD appreciation as a result of the accelerating interest hikes. c) TR may not be comfortable with the transformation of DI to fund/wealth mgt biz on its transition, degree of success, pace .... etc. d) TR may not be comfortable on the yet to matured DI, such as bad debt risks due to China slowdown, lockdown, property crisis ... etc. I do not think TR has the intention to run down YFH share prices but its EXIT will definitely have deep negative impact due to its huge 233mil holding and likely TR has a time pressure or schedule for the disposal. If TR were to dispose 5~10mil per day, 233mil will likely take 46~23 trading days or 2~1 months from 1 Jul. Until TR is done with the disposal, YFH will have to tahan this chilling winter before any reversal can sustainly happen. One positive observation to note is that there are Big Hands absorbing the huge volume selling in the past 3~4 weeks although the price still declined due to continuous huge volume disposal. 4) I am still of the opinion that Toe should continue to conduct regular SBB to minimise this massive disposal impact so that YFH could regain its reversal faster. The YFH webinar given on 12 Jul through Lim & Tan seems reasonably positive and Toe guided the NPAT at $221mil NPAT (lower than the ~$340mil norm) with anticipated cash drags, which I think is reasonably expected as the maturig DI are recycling out to new fund/wealth biz and there will be a twilight zone where the recycling funds are pending for suitable investments to deploy to. The above interpretations are drawn from the observations that I have made from SGX announcements, MAS shorts reports and daily price volumre actions. You may think otherwise and so just ignore my post. |
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GoldenPig
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15-Jul-2022 07:42
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Been thinking why big shareholders/funds like T Rowe dump a lot of shares recently. Is it because YFH is outside their funds mandates? Don' t think so. If that is the reason, they would have sold earlier at much higher prices. Dumb to sell off at lower prices instead. Is it because they know something bad about YFH that we retail investors don' t know? Don' t think so either. T Rowe only pared down their holdings, not sell off everything. I think it is because like most funds, they are highly leveraged. As the prices of their other holdings drop like stone, they need cash to top up their margin. So they sold some YFH holdings simply because they need cash. |
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GoldenPig
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12-Jul-2022 23:36
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Another old post by volvo125 👇 🏻 volvo125 01-Jun-2022 15:14 @pkli899, @emailpeter,
I tend to hold a very different view on how Ren was running YZJ in the past, as well as the nature of Debt Invest biz in the eyes of the public investors.
1. I certainly do not think Ren was hoarding on to the yoy fast growing cash piles since 2008 until the spin off. Hoarding cash means keeping the huge growing cash pile in the book without any meaningful competitive returns other than the mediocre risk free bank interest. The cash deployed in DI far exceeded the bank rate and has been generating a 3% returns per quarter or ~12% pa before tax and these consistent impressive returns were achieved with zero leverage.
2. It is not uncommon for companies to pay out 20~30% npat as dividend and retain the ~70% for capex, working capital, as reserve, reinvestment and capacity expansions, M& A .... etc. Ren was ploughing the excess returns after dividend payout and capex back into yard expansion and DI in the past 10 years+.
I vaguely read somewhere that YZJ had increased its yards from 2 to 4 in the past 10 years. On the SB front, It is highly likely that Ren could not go on a much more aggressive buying spree for more yards so as to ensure YZJ can achieve a delicate balance of capacity utilisation vs margin and in turn continue to be able to deliver strong profits and cash flow yoy. Hence most of the cash were deployed onto DI to maximise the coy overall returns while growing the coy NAV yoy.
3. I also do not see this DI an ah Long biz per se as Ah Long will charge far far higher interest than the ~12% pa interest (~3% per quarter) and in an unlicensed underground dealing manner. Ah Long will probably charge 10~20% per month with no collaterals needed. YFH has a valid Debt Investment license issued by the Chinese Government to conduct such loans disbursement and backed by sufficient collaterals, and these loans are disbursed out and managed in an open and professional manner as a listed coy. Further, prominent ultra high profile veterans in the Regulatory Finance sector such as Chew, Chua and Yee would never have or want to openly and legally associate themselves with YFH by taking up the ID roles and risk tainting their impeccable reputations if YFH is deemed operating even in the slightest flavor along the line of an ah Long coy outfit ...
4. YZJ is currently more than fully valued against its 0.83 NAV and is in the transition of being rerated to valuation on PE multiples. It will certainly take time to reach the uobkh 1.11 ( ~10xPE, which is 33% above its NAV) and probably many year to see cimb 1.64. Regardless, YZJ will continue to operate as a rock solid, debt free and growing cash machine that is now backed by a 3yr order book. I would expect the dividend payout rate will have to increase as the yoy free cash flow no longer has a viable DI avenue to deploy to.
5. YFH would easily meet the 8% ROE and payout 40% npat as dividend with the " proven" DI biz .... but Ren and Toe are progressively moving towards transforming the coy beyond DI to the supposedly higher margins pte equity investment, fund management (eg. thru ADDX .... ) and wealth management (family offices ... etc) biz. I' m no expert to critically appraise and comment on these new biz. But Ren has a very impressive record of building up YZJ and YFH and with a very strong and high profile board backing him, I am of the opinion that YFH can' t go far wrong.
At 0.50 today, YFH is still very, very undervalued at a mere 46%Nav with an estimated 7% yield at current price or 3.2% kE (est 0.035 dividend) with a yoy progressively growing Nav. I certainly have no qualm paying 50ct to buy such an impressive income generating $1.08 asset at face value with a high future capital appreciation potential..
Above are my opinions .... please ignore if you think otherwise ...
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GoldenPig
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12-Jul-2022 23:29
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Below is a post by volvo125 in the deleted 2022 Superstar thread. Had saved it as I found it very useful. Hope volvo will not mind that I reproduce it here in case others want to read it again. YFH Valuation 1 volvo125 17-May-2022 23:29 Contact Follow Quote! This ERM is actually new to me when I first saw it in Simplywall.st just days ago but I am familar with DCF, WACC and TV as I was involved in M& A activities. But their concepts are similar. DCF is for conventional coy while ERM is for asset mgt coy. By the way, I am also learning so we learn together. The 1.8% risk free rate taken from the 5yr Govt bond is a given, meaning anyone can just buy the bond and sure get this 1.8% pa coupon return no risk. There are certainly 10yr, 20yr, 30yr Govt Bond but no investment appraisal decision will use the higher risk free rate for the longer period bond for reference. This 1.8% risk free rate for 5yr Govt bond is suffice to be use as a perpeture growth rate reference ( note : assumption of growth rate to perpecturity, not just 5 years. ) Ignore the the 1.44 valuation by Simplywall.st because Simplywall.st was using a kE [or required rate of return on equity, or discount rate] computed with the prevailing S& P equity risk premium adjusted for the " supposedly" relevant Capital mkt beta (or risk), giving a kE 6.19%. But Ren is not paying us an equity return of 6.19%. Ren is paying us much less. And Simplywall.st certainly not aware Ren has intention to pay out only 40% of NPAT as dividend ( you may take the receipt of this dividend as the return that you get on the equity, meaning this is the kE for you and me) I shall lay this numbers out to you ( and all our friends here in this thread ) again using 40% payout policy, 8% ROE and 1st year NAV 1.08. 1. eps = 0.08*1.08 = 0.0864 2. 40% payout = 0.4*0.0864 = 0.03456 or 0.03456/1.08 = 3.2% [ this is the kE that you and I get, not 6.19% but 3.2% ] 3. ER (excess returns) = 0.0864 - 0.03456 = 0.05184 [ this excess value will go back into the asset pool [supposedly ... ideally] to capture new investments, meaning your NAV will go up by this amount.] 4. TV (terminal value) = 0.05184 / ( 3.2% -1.8% ) = 3.7 [ ok .... this is a another technical formula similar to the Gordon growth model, using dividend and cost of equity to determine the price. In this case, this sub model or formula within the ERM is trying to give a valuation to this Excess returns yoy (year on year) to perpetuity. The valuation (or terminal value) of this future stream of excess returns based 8% ROE, 3.2% kE will worth $3.7 per share today. Why use 3.2% minus 1.8% because 1.8% is a given, so the model wants to take the true return less risk free ] 5. YFH value = 1.08 + 3.7 = $4.78 per share To help you understand even better, now I shall lay out the Yr 2 numbers for you on the same 8% ROE, 40% payout :- 1. NAV yr 2 = 1.08 + 0.05184 = 1.13184 [ see ... the NAV has just increased due to the plough back of excess returns. The asset backing per share has strengthened. For an asset mgt coy, it also means that you have more cash to deploy for new investments. ] 2. eps = 0.08 * 1.13184 = 0.09055 ( still 8% ROE but your eps in absolute dollar term is higher ) 3. 40% payout = 0.03622 or 0.03622/1.13184 = 3.2% ( see ... still 3.2%, but your dividend on yr 2 is higher in absolute dollar term ) 4. ER = 0.09055 - 0.03622 = 0.05433 ( the excess returns value is also higher due to the higher eps in absolute dollar term ) 5. TV = 0.05433 / ( 3.2% - 1.8% ) = 3.88 ( the higher ER in yr 2 will give a higher TV ) 6. YFH value = 1.13184 + 3.88 = $5.01 per share Observations and Implications 1. YOY, the NAV will go up to the amount equivalent to the ER being ploughed back into the asset pool for reinvestment. 2. eps in absolute dollar term will go up yoy at the same 8% ROE, die die only 40% payout from NPAT. 3. ER will also go up yoy. 4. TV must go up yoy if ER is going up yoy on a constant 3.2% kE. 5. YFH equity value can only go up going forward Now, someone here may ask what exactly the Yr 1 value $4.78 and Yr 2 $5.01 mean or imply ? Now, if YFH so decide to sell away the business and find a buyer in Yr 1 now, the $4.78 will be used as a reference for negotiation. If this happens in Yr 2, then $5.01 will apply because the coy asset base has grown. Conclusions :- 1. So, NAV yoy higher + TV yoy higher will give a 2 prones value increase on YFH equity value yoy. 2. You will get more dividend in cash term yoy even though the payout is capped at a constant 40% NPAT or a translated 3.2% kE. 3. YFH will become an infinitely growing cash machine .... The valuations worked out above are drawn from ERM (not me ...), the financial model used by the professional valuers to appraise Asset Mgt Coy in the Capital mkt. In the short run when little is known or not clear on how the YFH internal mechanics works, the stock market will accord a discount to the coy ..... some times very steep as in what we see today at 0.415 close. In the long run, the full effect on how all the above numbers will play out based on Mgt (Ren and Toe) committed 8% ROE ( i vaguely remember he mentioned target 8~10% ROE) and 40% payout policy. This post very long ... so likely a lot of typo .... pardon. Kindly ignore this post if you do think I am talking nonsense ..... |
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GoldenPig
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12-Jul-2022 22:56
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Is there a need to compare the image and reputation of YFH with YSB? 🤔 After all, they are different businesses. Perhaps YFH might ride on the image and reputation of YSB at first. But YFH might have already built up its own image & reputation in the loans market over the years. Perhaps we might want to consider instead how much of the relevant core values that make YSB successful can be carried over to YFH.
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GoldenPig
Veteran |
12-Jul-2022 21:47
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YFH can be attractive in various ways. Its zero debt and low PB attract value investors. Its dividend policy and potential dividend growth attract dividend investors. Its high market liquidity and volatility attract traders and short term investors. Hope that posts in this new thread will share useful news and insights about YFH from these various angles, without running down others who view YFH from a different angle. |
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