YZJ Fin Hldg    Last:0.225   -

YZJFH - potentially rewarding

I will share in this thread if the mgt does reply. The mgt may choose to reply or address this question during the EGM, I'm not sure.

 

YZJF Circular dated 12Aug 1 message Thu, 14 Aug 2025 at 5:34  pm To: Zhou Yan , [email protected] Hi PR of YZJF, I hold shares in YZJF and I have a question for the management. xxxxxxx  as at the Latest Practicable Date, the Company envisages that based on an amount of up to S$250 million to be raised from the Proposed Placement, it will result in a percentage reduction of 20.0% or more of the Company&rsquo s equity interest in YZJ Maritime, under Rule 805(2)(b) xxxxx Regardless how I read the above, this 20% dilution is  attributed to the additional proposed placement $250m and the impact will result in YFM, not due to the YFH/YFM capital reduction exercise. It seems to me that the issuance of this $250m to these new group of so called "sophisticated" investors (AI and Institution Investors) will cause a 20% dilution to all the existing shareholders due to the final enlarged share base value (~$2B + $250m) = ~$2250m. Just a quick crude workout. The post spin off original base is ~$2000m. If the new placement increase the value by $500m to $2500m, then the original group of shareholders will see their ownership become 2000/2500 = 80%, or their ownership are diluted by 20%. However, the share placement is only $250m, not $500m, yet can impact a 20% dilution. So does it mean that this new shares are going to be issued at a steep 50% discount ?  Could the management kindly enlighten me on the above ? If my interpretation is correct, then I think it is a very unfair deal for the existing shareholders. I look forward to hearing from the management soon.

 

volvo125      ( Date: 14-Aug-2025 17:01) Posted: No I don't, I just emailed the PR listed inside the announcement release.

 

This was my initial interpretation too. 
I actually see some deliberate actions to keep price in check at the moment.
To new investors advantage as lousy price means lower placement price.

volvo125      ( Date: 14-Aug-2025 16:49) Posted: xxxxxxx as at the Latest Practicable Date, the Company envisages that based on an amount of up to S$250 million to be raised from the Proposed Placement, it will result in a percentage reduction of 20.0% or more of the Company&rsquo s equity interest in YZJ Maritime, under Rule 805(2)(b) xxxxx Haiz ..... i think my English really cannot make it. Regardless how I read the above, this 20% dilution is still attributed to the additional proposed placement $250m and the impact will result in YFM. It still seems to me that the issuance of this $250m to the new shareholders will cause a 20% dilution to all the existing shareholders due to the final enlarged share base value (~$2B + $250m) = $2250m. Just a quick crude workout. The post spin off original base is ~$2000m. If the new placement increase the value by $500m to $2500m, then the original group of shareholders will see their ownership become 2000/2500 = 80%, or their ownership are diluted by 20%. However, the share placement is only $250m, not $500m, yet can impact a 20% dilution. So does it mean this mean this new shares are going to be issued at a steep 50% discount ? I think I need to re-take my GCE O level English again to really interpret the above statement ....

 

No I don't, I just emailed the PR listed inside the announcement release.

 

Your calculation is right if based on 20% dilution and yes, the discount is 50% to NAV! I done the calculation too and I do not think why would the company give 50% discount to a handful of institutional investors and AIs to the detriment of existing holders? More probably explanation is since they are doing placement concurrently with YZJM distribution and the main YZJF will have 0% equity interest post the concurrent distribution and placement, they are obliged to seek shareholders approval since 0% from 100% has breached the threashold of more than 20% dilution. Do you have a com line established already with YZJF, perhpas can fire them the question lol.

volvo125      ( Date: 14-Aug-2025 16:49) Posted: xxxxxxx as at the Latest Practicable Date, the Company envisages that based on an amount of up to S$250 million to be raised from the Proposed Placement, it will result in a percentage reduction of 20.0% or more of the Company&rsquo s equity interest in YZJ Maritime, under Rule 805(2)(b) xxxxx Haiz ..... i think my English really cannot make it. Regardless how I read the above, this 20% dilution is still attributed to the additional proposed placement $250m and the impact will result in YFM. It still seems to me that the issuance of this $250m to the new shareholders will cause a 20% dilution to all the existing shareholders due to the final enlarged share base value (~$2B + $250m) = $2250m. Just a quick crude workout. The post spin off original base is ~$2000m. If the new placement increase the value by $500m to $2500m, then the original group of shareholders will see their ownership become 2000/2500 = 80%, or their ownership are diluted by 20%. However, the share placement is only $250m, not $500m, yet can impact a 20% dilution. So does it mean this mean this new shares are going to be issued at a steep 50% discount ? I think I need to re-take my GCE O level English again to really interpret the above statement ....

 

yup only known factor is minimum $250m worth of placement. Anyway if any of the resolution not passed, the other 2 resolutions will not pass too. They are inter contigent on each others. 

pasttime      ( Date: 14-Aug-2025 16:47) Posted: i will reject resolution number 2  as no price is mentioned per share or even indication of the placement price caluclation.  approving it is giving management blank cheque. what if the price is 1 cent.  then how? think they need to do more work and give a details.

 

xxxxxxx as at the Latest Practicable Date, the Company envisages that based on an amount of up to S$250 million to be raised from the Proposed Placement, it will result in a percentage reduction of 20.0% or more of the Company&rsquo s equity interest in YZJ Maritime, under Rule 805(2)(b) xxxxx Haiz ..... i think my English really cannot make it. Regardless how I read the above, this 20% dilution is still attributed to the additional proposed placement $250m and the impact will result in YFM. It still seems to me that the issuance of this $250m to the new shareholders will cause a 20% dilution to all the existing shareholders due to the final enlarged share base value (~$2B + $250m) = $2250m. Just a quick crude workout. The post spin off original base is ~$2000m. If the new placement increase the value by $500m to $2500m, then the original group of shareholders will see their ownership become 2000/2500 = 80%, or their ownership are diluted by 20%. However, the share placement is only $250m, not $500m, yet can impact a 20% dilution. So does it mean this mean this new shares are going to be issued at a steep 50% discount ? I think I need to re-take my GCE O level English again to really interpret the above statement ....

 

Is not easy to place shares prior to listing. Unlike IPO where share price already predetermined.
In this case, trading has not started, so placement has no price to base on.
One possible way is based on NAV and give a slight discount to entice investors.
This is to say, in order to raise $250m, some 400m over new units need to be issued
(at roughly 60c per share with NAV estimated to be slightly above this price).
In actual fact, NAV is less than 60c (maybe wrong).
Hence, dilution of at least 10% is expected based on above scenario.
I wonder why they want to raise this money so urgently (flush with cash currently)?
They can do placement after the spinoff.
With confidence so high, share price should then be at a premium to NAV.
Assuming price went above 80c shortly after listing, do the placement then.
They would be able to raise the same amount with at least 100m units less new shares issued.    

 

i will reject resolution number 2  as no price is mentioned per share or even indication of the placement price caluclation.  approving it is giving management blank cheque. what if the price is 1 cent.  then how?
think they need to do more work and give a details.

 

free free make a guess of placement price.

250m maybe give 321m shares that will be about about 77 cents per share.
good number as it means soon soon.

soon soon huat.

 

Yes. Maciam semi IPO and this would have addressed Sng123' s ' concern' but for whatever reasons, he/she is no longer here. Perhaps finally give up on privatisation of YZJF. Just joking hor. On a more serious note, whatever dilution would be the conventional calculation, much depending on placement price vs NAV per share since there won' t be ' market' price before placement is completed. Our dilution is certain in term of percentage of holding as the placement will enlarge the share base. If the placement price is equal or more than NAV per share, then the placement is in fact accretive to existing share holders but I guess it wont happen, sure got discount. 

pkli899      ( Date: 14-Aug-2025 15:33) Posted: Concurrently! Very bold move....at what price do they intend to place the new shares? Tricky as well.

 

Concurrently!
Very bold move....at what price do they intend to place the new shares?
Tricky as well.

 

As per circular, placement supposed to be done ' concurrently' . This is in fact interesting because by then, the NAV of YZJM will be known [should be around $0.60 more or less] and the placement price in this instance, is kind of like IPO offer price. Whatever placement price it is, it show that institutional investors and AI are taking them up. If there is over allotment and the placement price is only 5% discount or no discount or even at a premium, that would bode well for YZJM. Just cross my mind too, could the previous AIs insiders who wanted to buy TS the same group/people who are now interested in the placement shares? Why YZJF already indicating $250m? Could it be there already indication of interested buyers?

pkli899      ( Date: 14-Aug-2025 15:15) Posted: Spin off fastest will be Sep, after EGM. No time frame for placement? Probably shortly after listing of YZJM. Is $250m the maximum they looking at? How about the over allotment which was mentioned ?

 

It is currently intended that the YZJ Maritime Distribution and the Proposed Placement will take place concurrently with the Proposed Listing. Shareholders should note that the Placement Shares to be issued pursuant to the Proposed Placement will not affect their respective interests or entitlements under the YZJ Maritime Distribution. However, the proportionate shareholding interest of Shareholders in YZJ Maritime will ultimately be reduced, owing to the enlarged share capital of YZJ Maritime arising from the issuance of the Placement Shares in connection with the Proposed Placement. Shareholders should also note that the actual level of the dilution of their respective shareholding interest in YZJ Maritime will depend on, among other things, the Placement Price and the total number ofPlacement Shares to be issued in connection with the Proposed Placement. Rule 805(2)(b) of the Listing Manual requires an issuer to obtain the prior approval of shareholders in a general meeting if a principal subsidiary issues shares or convertible securities or options that will or may result in a percentage reduction of 20.0% or more of the issuer&rsquo s equity interest in the principal subsidiary, which is a subsidiary whose latest audited consolidated pre-tax profits (excluding the minority interest relating to that subsidiary) as compared with the latest audited pre-tax profits of the group (excluding minority interest relating to that subsidiary) accounts for 20.0% or more of such pretax profits of the group. In determining profits, exceptional and extraordinary items are to be excluded. The unaudited consolidated pre-tax profit of the Spin-off Group (excluding minority interests) for FY2024 was approximately S$197.8 million while the audited consolidated pre-tax profit of the Enlarged Group (excluding non-controlling interests) was S$373.1million. Accordingly, the Spin-off Group accounted for approximately 53.0% of the Enlarged Group&rsquo s pre-tax profit for FY2024 and hence is considered a principal subsidiary of the Company. Under the Proposed Placement, new shares in the capital of YZJ Maritime are proposed tobe issued. Although the relevant details of the Proposed Placement have not beendetermined presently, as at the Latest Practicable Date, the Company envisages that based on an amount of up to S$250 million to be raised from the Proposed Placement, it will result in a percentage reduction of 20.0% or more of the Company&rsquo s equity interest in YZJ Maritime, under Rule 805(2)(b) of the Listing Manual. Following the completion of the Proposed Capital Reduction and YZJ Maritime Distribution but prior to the completion of the Proposed Placement, the Company&rsquo s equity interest in YZJ Maritime will be reduced to 0%. Following completion of the Proposed Placement, the Company&rsquo s equity interest in YZJ Maritime is still expected to be 0% as none of the Placement Shares are expected to be issued to the Company. Accordingly, in addition to Shareholders&rsquo approval for the Proposed Spin-off, the Company is seeking Shareholders&rsquo approval for the Proposed Dilution at the EGM.

For the benefits of all long long holders. The above are relevant extracts [emphasis highlighted by me] from circular with regard to the supposed 20% dilution to YZJF and hence requiring shareholders approval for the placement. YZJM is a " principal subsidiary" as it contributed  53% of YF8&rsquo s 2024 pre-tax profit  (SGD 197.8M of SGD 373.1M). Post-spin, YZJF&rsquo s stake in YZJM drops to  0%  (since YZJM is fully distributed to shareholders). Thus, the placement technically dilutes YZJF&rsquo s interest from 0% to 0% [note: more than 20% so called ' dilution' , but SGX still requires approval because YZJM was a principal subsidiary.

 

Spin off fastest will be Sep, after EGM.
No time frame for placement?
Probably shortly after listing of YZJM.
Is $250m the maximum they looking at?
How about the over allotment which was mentioned ?

 

Haha yes it is confusing. A reading at pg 63 and 64 of the circular should help clear up the confusion. Basically YZJM is deemed a subsidiary of YZJF and YZJF needs shareholders approval since concurrently with the spin off, there is a private placement and the placement may reduce YZJF' s equity interest in YZJM by more than 20%. I do not think the dilution will be so much but the resolution is just a fail proof mechanism. Hopefully the placement is at a premium so there is no dilution! 

 

There is a confusion here. I saw the 20% dilution statement appearing in the clause "resulting from the proposed placement " I was thinking this 20% dilution impact is attributed to the additional $250m shares placement post spin off, and not referring to YFH/YMD capital reduction exercise. I read and had the interpretation that the $250m shares will be placed out to AI and Institution Investors with a 20% dilution impact, meaning YMD is going to issue $250m worth of shares to these groups of "sophisticated" investors at a steep ~38% discount (re-worked back to effect a 20% dilution impact). So my reading and interpretation was wrong ... I had a scare seeing a 20% dilution ... ha ha.

HVRRVH      ( Date: 13-Aug-2025 22:08) Posted: The effect of dilution on existing shareholder' s share holding depends on the issuing price. In thoery, there is no dilution if the placement shares are priced at NAV per share. In this scenario, even though the total sharebase increased thus our existing shares in term of percentage shrink simply due to more shares [while our shares didn' t increase], however, the money from the placement shares would add to NAV so in term of NAV per share, our existing shares will also ' get' the increased NAV per share so no dilution. If the placement price is below NAV, then there is real dilution for existing holders. The more discount of placement price, the more dilution. As for the 20% dilution you mentioned, there is no bearing because this dilution refer to the proposed deduction/reduced of YZJF' s capital. The deduction/reduction is due to transfering of certain assets to YZJM [the new spin off company] and the assets transfer, when materialised, would be more than 20%. In fact, we already have the figures, after spin off, YZJF' s net asset value will be about $2.09b and YZJM' s will be about $2b [versus total of about 4b now for the pre spin off combined entity i.e. YZJF]. With regard to placement, usually discount will be given so, it will be interesting because if the share price stay allevated or even exceed NAV, then the placement price could be above NAV too. On that note, the current share price is still some way from NAV. Also, now the NAV I also don' t know to use $1.17 or $1.11.  As for the 1H25 results. Yup, yoy increased but lost out to 2H24 which see eps of 5.36 cents, I think. Having said that, I think the spin off is the main show now. The maritime businesses as a segment of the combined entity, has gone up to current level of 60% in FY24 as far as total income is concerned, this is up from 0.8% and about 15% in 2022 and 2023 respectively [ref: pg 44 of the latest circular]. This show the tremendous growth potentials of YZJM. So with the listing NAV per share of about $0.63 [my estimation based on information in the circular but the placment price will affect NAV per share], best case scenario is market accord YZJM with share price higher than NAV. As for YZJF, with increasing scale down of China DI, the market may also view it more favourably if the other business segments start to show that they can bring in higher eps. In a nut shell, I am cautiously optimistic.    pkli899      ( Date: 13-Aug-2025 15:16) Posted: A mixed result to me. Certain segments good, others so so only.   Write back of allowances significantly pushed up the profit. However, unfavourable RMB exchange rate was a damper. As a result, a surprise dropped in NAV. Say if there is no spin off and 1st half performance is repeated in 2nd half the eventual dividend will not be able to match that of previous 3.45c. My interpretation can be wrong and I certainly hope any expert can correct me. As to the spin off, obtaining unanimous support is a foregone conclusion. 4th Sept EGM will just be a formality. My only concern is the private placement to raise $250m. It is certainly going to dilute our shareholding. I thought I came across somewhere in the announcement that mentioned something to the effect of 20% dilution. Again, I hope this is wrong too. Another issue I would like to know is what are they going to do with 1st half profit? Give it away as interim dividend just before spin off or split accordingly among the two entities? If so, would the new units from placement entitled to this profit? In normal circumstances, placement shares are sold at a discount to entice investors. It would not be fair, shares acquired at a discount, still get to enjoy profit earned prior to their acquisition. The placement shares can be sold with the profit priced in. That way, there will not be any disadvantage to existing shareholders.

 

You are welcome. Just sharing to the best of my understanding and knowledge and personally I would be careful in what I share, to ensure factual and accuracy but may still be lacking in some aspects so I believe everyone of us will independently fact checks and won' t simply take what' s posted in forum as gospel truth or right interpretation of information. Just to add with regard to the dividend, I think if we continue to hold YZJF and YZJM post spin off, there is no issue as the dividend will be either payout by YZJF or split betwen the 2. I really don' t know lol. 

pkli899      ( Date: 14-Aug-2025 08:56) Posted: Thank you HVRRVH for your insight. Overall, I' m happy with the development.

 

So the maritime price will be about $6.5 ?.....am I correct .?

tch77_pt75      ( Date: 14-Aug-2025 08:58) Posted: If the management do it right, a fund that has about $150m can also has a share/unit price of S$2.5, which YZJFH currently has about $4b 😃