If anyone here still think the yield expectation demanded on YFH by Mr Market is still at 6.1% (It was 6.6% in FY23), I believe ... no more liao. YFH has just initiated a small net $15m write back for FY24, signaling the uncertain NPL provision problem is now already behind the coy. This implies that the ~20% risk premium once imposed on YFH in FY23 will be lifted. Together with the 1% Fed rate reduction already in place, YFH will be re-rated to reflect these changing dynamics.

 

@Salim88 has presented a Cup& Handle chart and projected a TP of 0.77 on 31Jan2025. This was his workings :-

 

= Cash & Yield enhancement products + 1/2 the value of all other investments - Total Liabilities  = $0.49 + 0.5 ( $0.68) - $0.06  = $0.77

 

I love @Salim88 C& H chart and while I certainly do not think YFH will see 0.77 any time soon then in late Jan, I am now vaguely seeing YFH moving towards 0.77 in the horizon. The Fed rate reduction (1%) and the lifting of risk premium (1.1% seen imposed on FY23 on top of the Fed rate then, or an equivalent risk premium at ~20% of the Fed rate) due to the clearance of NPL provision uncertainty will likely now benchmarked YFH normally back to around the prevailing Fed rate of 4.5%. This works out to be (0.0345 / 0.045) = 0.766 or 0.77 nearest.

 

So Yes, my near term TP for YFH is now pointing towards 0.77, similar to what Salim88 has earlier projected on 31Jan2025, though both of us have somehow come to the same TP using different means of underlying assumptions.