YZJFH listing on SGX
- Yangzijiang Financial (YZJFH) will make its first debut on SGX on 28-Apr @ 1pm
- YZJFH theoretical implied price range at S$0.57-0.66, based on YZJ cum distribution last trading price of S$1.54, vs closing on first day ex-distribution price of S$0.97 and last close of S$0.88.
- This implies 39-47% discount to YZJFH’s BVPS of S$1.08
- Plan to launch share buyback, which approvals could take ~5-weeks
Some key takeaways from analyst briefing held on 26-Apr:
- Dividend payout ratio will be raised from at least 30% to 40%. Based on S$400m profit assumption, this will translate to approx.. 4 sct DPS.
- Management plans to kick start share buyback mandate application process immediately after listing, which may take approx. 5-weeks to complete. This shall lend support to share price to trade closer to book of S$1.08 afterwards.
- For next 2-years, earnings growth shall transformation towards higher return investment and deployment of 25% cash. We could expect 3rd party funds to grow especially from China (through GDLP). Looking beyond that, with track record post listing, YZJFH shall also grow its 3rd party fund management business overseas especially in Singapore.
- By 2023, YZJFH shall reduce the current debt investment to 30% (from current 75%) of portfolio, redeploying into other equity and fixed income investment as well as special situation investment
- Management may consider China Depository Receipt (CDR) for Yangzijiang Shipbuilding to increase liquidity and narrow valuation gap; and possibly YZJFH after establishment of track record.