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Latest Forum Topics / YZJ Shipbldg SGD    Last:2.53    -0.1  Post Reply
Cruising with the ship ..Yangzijiang
darkknight
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21-Mar-2013 14:58     
 
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Is  there a write back on the provision for impairment as the security matured?   The 2012 provision is half that of 2011 despite increases in the HTM assets. Not an expert in reading the cash flow statement, is the cash flow positive from the HTM deployment? If not, I will be worried as it contradicts the intention of using HTM to fund dividend payouts.

cheongsl      ( Date: 20-Mar-2013 21:21) Posted:



Note your sources. 

 

dippyboy      ( Date: 20-Mar-2013 08:31) Posted:



Hi cheong,

i believe you just copy and paste the segment results.However if you used both current and non current assets htm which is the total ,my figures for htm is correct.

The 900m investment income you mention is the gross revenue.There is substantial interest cost involved from the borrowings which should be used to stripped out from the gross revenue.There is also impairment of htm products which should be stripped out from any returns and my estimates are based on that.In 2012 the total borrowings is 7.4b with a total of 11.4b htm products.

the micro finance business is not the htm segment as its insignificant to it. 


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WanSiTong
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21-Mar-2013 10:39     
 
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 Alert Admin 		hen tat kaki hen tak  0.945 / 0.950 for quite sometime !!? Smiley
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cheongsl
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20-Mar-2013 21:21     
 
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Note your sources. 

 

dippyboy      ( Date: 20-Mar-2013 08:31) Posted:



Hi cheong,

i believe you just copy and paste the segment results.However if you used both current and non current assets htm which is the total ,my figures for htm is correct.

The 900m investment income you mention is the gross revenue.There is substantial interest cost involved from the borrowings which should be used to stripped out from the gross revenue.There is also impairment of htm products which should be stripped out from any returns and my estimates are based on that.In 2012 the total borrowings is 7.4b with a total of 11.4b htm products.

the micro finance business is not the htm segment as its insignificant to it. 

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cheongsl
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20-Mar-2013 19:59     
 
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 Alert Admin 		Noted, since it is non derivative,thus hedgeing is not part of it.

WanSiTong      ( Date: 20-Mar-2013 13:56) Posted:

Extraded from YZJ annual Report 2011 (2012 is not availiable), Pg 56- Significant Accounting policies :

(iii) Financial assets, held-to-maturity

Financial assets, held-to-maturity are non-derivative financial assets with fixed or determinable

payments and fixed maturities that the Group’s management has the positive intention and

ability to hold to maturity. If the Group were to sell other than an insignificant amount of financial

assets, held-to-maturity, the whole category would be tainted and reclassified as available-forsale.

They are presented as non-current assets, except for those maturing within 12 months after

the balance sheet date which are presented as current assets.

(iv) Financial assets, available-for-sale

Financial assets, available-for-sale are non-derivatives that are either designated in this category

or not classified in any of the other categories. They are presented as non-current assets unless

management intends to dispose of the assets within 12 months after the balance sheet date.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on the trade-date – the date on

which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have

expired or have been transferred and the Group has transferred substantially all risks and rewards of

ownership. On disposal of a financial asset, the difference between the carrying amount and the sale

proceeds is recognised in profit or loss.Any amount in the fair value reserve relating to that asset is

transferred to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets

at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial

assets at fair value through profit or loss are recognised immediately as expenses.

(d) Subsequent measurement

Financial assets, available-for-sale and financial assets at fair value through profit or loss, are

subsequently carried at fair value. Loans and receivables and financial assets, held-to-maturity are

subsequently carried at amortised cost using the effective interest method.

cheongsl      ( Date: 19-Mar-2013 07:30) Posted:



Hi dippyboy,

I don't quite get you what do you mean by 11 rmb htm asset is like CAO, what do you mean  by 6% interest as this seems to be different from their financial report? Maybe you can provide your proof for your wording why with htm asset is big time speculating?

Most company have held to maturity investment, especially in building industries. They will need vest amount of raw material, and the project is not complete within a short period. Eg. when the contract is sign, the fabrication and manufacturer might take 1 years later to start. Thus to avoid the contract from getting into loss, the company will need to hedge the material price for 1 year, so that the price of material go up the company will still get the material at the same price as 1 year ago, if it go down the company might consider loss the hedging and purchase directly outside or just complete the hedging sales. Similar go to foreign currency, hedgeing might also required.

Every normal individual also have held to maturity investment, insurance, fixed deposit, saving insurance, etc
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WanSiTong
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20-Mar-2013 13:56     
 
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Extraded from YZJ annual Report 2011 (2012 is not availiable), Pg 56- Significant Accounting policies :

(iii) Financial assets, held-to-maturity

Financial assets, held-to-maturity are non-derivative financial assets with fixed or determinable

payments and fixed maturities that the Group’s management has the positive intention and

ability to hold to maturity. If the Group were to sell other than an insignificant amount of financial

assets, held-to-maturity, the whole category would be tainted and reclassified as available-forsale.

They are presented as non-current assets, except for those maturing within 12 months after

the balance sheet date which are presented as current assets.

(iv) Financial assets, available-for-sale

Financial assets, available-for-sale are non-derivatives that are either designated in this category

or not classified in any of the other categories. They are presented as non-current assets unless

management intends to dispose of the assets within 12 months after the balance sheet date.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on the trade-date – the date on

which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have

expired or have been transferred and the Group has transferred substantially all risks and rewards of

ownership. On disposal of a financial asset, the difference between the carrying amount and the sale

proceeds is recognised in profit or loss.Any amount in the fair value reserve relating to that asset is

transferred to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets

at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial

assets at fair value through profit or loss are recognised immediately as expenses.

(d) Subsequent measurement

Financial assets, available-for-sale and financial assets at fair value through profit or loss, are

subsequently carried at fair value. Loans and receivables and financial assets, held-to-maturity are

subsequently carried at amortised cost using the effective interest method.

cheongsl      ( Date: 19-Mar-2013 07:30) Posted:



Hi dippyboy,

I don't quite get you what do you mean by 11 rmb htm asset is like CAO, what do you mean  by 6% interest as this seems to be different from their financial report? Maybe you can provide your proof for your wording why with htm asset is big time speculating?

Most company have held to maturity investment, especially in building industries. They will need vest amount of raw material, and the project is not complete within a short period. Eg. when the contract is sign, the fabrication and manufacturer might take 1 years later to start. Thus to avoid the contract from getting into loss, the company will need to hedge the material price for 1 year, so that the price of material go up the company will still get the material at the same price as 1 year ago, if it go down the company might consider loss the hedging and purchase directly outside or just complete the hedging sales. Similar go to foreign currency, hedgeing might also required.

Every normal individual also have held to maturity investment, insurance, fixed deposit, saving insurance, etc.

dippyboy      ( Date: 19-Mar-2013 02:16) Posted:



If theres a systemic default in the 11b rmb htm asset on the balancesheet, then the 6% interest to be the guarantor of such loan on behalf of the banks to take on all the default risk will make it look foolish since banks earns the other 6% risk free off balancesheet.

  Always fishy when a company went big time to speculate big on its non-core business. Sounds like another CAO if the credit bubble implodes in china. Its cheap for a good reason ........
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dippyboy
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20-Mar-2013 08:31     
 
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Hi cheong,

i believe you just copy and paste the segment results.However if you used both current and non current assets htm which is the total ,my figures for htm is correct.

The 900m investment income you mention is the gross revenue.There is substantial interest cost involved from the borrowings which should be used to stripped out from the gross revenue.There is also impairment of htm products which should be stripped out from any returns and my estimates are based on that.In 2012 the total borrowings is 7.4b with a total of 11.4b htm products.

the micro finance business is not the htm segment as its insignificant to it. 
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iPunter
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20-Mar-2013 07:45     
 
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Good perspectives and insights on this counter...  Smiley

 
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cheongsl
Master
20-Mar-2013 07:35     
 
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Hi dippyboy,

Thanks for sharing, but your figure seems to be strange and does not tally with what the financial report.

  2012 ('000 RMB) 2011 ('000 RMB)
Shipbuilding Related Segment 13,487,258 14,608,897
Held-to-Maturity Investment 1,096,331 916,878
Micro Finance Business 215,503 180,053
Total Revenue  14,799,092 15,705,828


In your analysis you mention 2011 HTM revenue as 600m, but the actual is 916.9m. And your reason for the risk is borrowing to other business, but that belong to micro finance business. FYI, 6% return isn't alot, it is even lower then the GDP of China. The HTM asset in 2012 is 7.5b and  2011 is 6.6b and not 11.4b as what you have state.

And the warrant issue to pay the divident is also very funny in the ideas that the warrant is only S$19m, but the divident payout is S$191m.   

 

dippyboy      ( Date: 19-Mar-2013 23:58) Posted:



Hi cheong, 

basically i look at the finances and roughly there is 600m revenue from 10b htm year 2011 with 100 profit and 500m provision for impairment. this means 6% margins is from this htm loans but earning only 1% real returns with real default risks. Its mind boggling when there is risk free fixed deposit rates of 3.3% in china rmb but coy choose to invest and take on risk in these off balance sheet financing for smaller business in china at such ridiculous net returns.Banks obviously are happy to facilitate such loans much like how they shift risk thru sale of wealth mgmt products and earns hefty commisions risk free. As you should know banks in china have reserve ratios that limit circulation of money and banks usually lends to state owned business with implicit state backing .Smaller biz have difficult time borrowing and they collaborate with banks thru off balance sheet financing and i believe yzj is a party to this phenomenom by acting as a third party risk taker to earn high interest from such shortterm underground lending. 

  Moreover   good corporate governance means unutilized cash should be returned to shareholders if it cant be put to good use. There is currently 11.4b htm products out of 16b equity which is not a usual htm investment level.More over coy recently needs to raise warrents for cash for working capital use despite having such massive htm investment and instead of drawing it down, it raise it to 11.4b. Then there is   1b dividen to be paid and subtantial capital needs to develop its residential project so one can only wonders why such a decision is made to further increase htm portfolio . Is it acting as a charity supporting local industries ? In effect additional borrowing are akin to borrioing and paying interest to pay dividens. Why would one do such thing if coy is already cashrich.

  If yzj wants to be a banker then since it take on the full risk as a bank , then it should earn corresponding reasonable returns for the risks. Anyway its a ship builder with no banking experience and risk mgmt framework of a lender.Its always highly suspicious when core business is subordinate to speculative investment. Moreover its a chinese company so the previous wave of fraud in chinese firms definately affects sentiment since who are they lending so much money to.If the borrowers abscond, will the quality of collateral be retrievable and is there any enforcebility in the claims in the event of a systemic default in htm lending......




Already we have heard of   longyuan , huaxia banks defaults in wealth mgmt products and recently the solar bond implosion. Many of the loans could be lend to unsustainable businesses which thrives on the stimulus binge in 09. Now with the free money all dried up , many are not sustainable in an environment of excess capacity and cutthroat competition.

iPunter      ( Date: 19-Mar-2013 07:58) Posted:



I would say that term stock-trading, ie holding for various durations, is essentially a compromise of sorts, since long-term holding is beset with the frustration of frequent market corrections resulting in much time wasted while waiting for returns.

It is hard to say which approach is better than the other, since both approaches are faced with potential for big losses if wrong decisons are made, regardless of the time frame involved.

Ultimately, which approach to adopt is purely dependent on the temperamental make-up and aptitude of the individual for each. 


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dippyboy
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19-Mar-2013 23:58     
 
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Hi cheong, 

basically i look at the finances and roughly there is 600m revenue from 10b htm year 2011 with 100 profit and 500m provision for impairment. this means 6% margins is from this htm loans but earning only 1% real returns with real default risks. Its mind boggling when there is risk free fixed deposit rates of 3.3% in china rmb but coy choose to invest and take on risk in these off balance sheet financing for smaller business in china at such ridiculous net returns.Banks obviously are happy to facilitate such loans much like how they shift risk thru sale of wealth mgmt products and earns hefty commisions risk free. As you should know banks in china have reserve ratios that limit circulation of money and banks usually lends to state owned business with implicit state backing .Smaller biz have difficult time borrowing and they collaborate with banks thru off balance sheet financing and i believe yzj is a party to this phenomenom by acting as a third party risk taker to earn high interest from such shortterm underground lending. 

  Moreover   good corporate governance means unutilized cash should be returned to shareholders if it cant be put to good use. There is currently 11.4b htm products out of 16b equity which is not a usual htm investment level.More over coy recently needs to raise warrents for cash for working capital use despite having such massive htm investment and instead of drawing it down, it raise it to 11.4b. Then there is   1b dividen to be paid and subtantial capital needs to develop its residential project so one can only wonders why such a decision is made to further increase htm portfolio . Is it acting as a charity supporting local industries ? In effect additional borrowing are akin to borrioing and paying interest to pay dividens. Why would one do such thing if coy is already cashrich.

  If yzj wants to be a banker then since it take on the full risk as a bank , then it should earn corresponding reasonable returns for the risks. Anyway its a ship builder with no banking experience and risk mgmt framework of a lender.Its always highly suspicious when core business is subordinate to speculative investment. Moreover its a chinese company so the previous wave of fraud in chinese firms definately affects sentiment since who are they lending so much money to.If the borrowers abscond, will the quality of collateral be retrievable and is there any enforcebility in the claims in the event of a systemic default in htm lending......




Already we have heard of   longyuan , huaxia banks defaults in wealth mgmt products and recently the solar bond implosion. Many of the loans could be lend to unsustainable businesses which thrives on the stimulus binge in 09. Now with the free money all dried up , many are not sustainable in an environment of excess capacity and cutthroat competition.

iPunter      ( Date: 19-Mar-2013 07:58) Posted:



I would say that term stock-trading, ie holding for various durations, is essentially a compromise of sorts, since long-term holding is beset with the frustration of frequent market corrections resulting in much time wasted while waiting for returns.

It is hard to say which approach is better than the other, since both approaches are faced with potential for big losses if wrong decisons are made, regardless of the time frame involved.

Ultimately, which approach to adopt is purely dependent on the temperamental make-up and aptitude of the individual for each. 


cheongsl      ( Date: 18-Mar-2013 22:25) Posted:

Yup shorting is investing also, if you do proper planing. But I don't short as the room for loss might be much higher then long, and I don't have confidence that my view will correct most of the time, as there are always 10% or 15% probability scenario that turn into the other way
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cheongsl
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19-Mar-2013 12:12     
 
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 Alert Admin 		I don't think they will let it run before the AGM.
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Hulumas
Supreme
19-Mar-2013 10:22     
 
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" 叮 噹 " 交 易 , 大 势 所 趋 .

kingkongdotcom      ( Date: 19-Mar-2013 09:58) Posted:

Wall on 0.955.
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kingkongdotcom
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19-Mar-2013 09:58     
 
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 Alert Admin 		Wall on 0.955.
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iPunter
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19-Mar-2013 07:58     
 
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I would say that term stock-trading, ie holding for various durations, is essentially a compromise of sorts, since long-term holding is beset with the frustration of frequent market corrections resulting in much time wasted while waiting for returns.

It is hard to say which approach is better than the other, since both approaches are faced with potential for big losses if wrong decisons are made, regardless of the time frame involved.

Ultimately, which approach to adopt is purely dependent on the temperamental make-up and aptitude of the individual for each. 


cheongsl      ( Date: 18-Mar-2013 22:25) Posted:

Yup shorting is investing also, if you do proper planing. But I don't short as the room for loss might be much higher then long, and I don't have confidence that my view will correct most of the time, as there are always 10% or 15% probability scenario that turn into the other way.

iPunter      ( Date: 14-Mar-2013 13:32) Posted:



Shorting is method of investing...

The shorter invests his money (margin) with the intention to cover his position when profits are made.

Longers are also well known to lose a lot of money in stocks. So whether one goes long or short, it is still an investment choice, the aim of investment being to grow one's money. One can gorw one's money by shorting. If this is not true, then no one will be playing short.

Furthermore, shorts also provide added liquidity to the market, which is desirable.
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cheongsl
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19-Mar-2013 07:30     
 
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Hi dippyboy,

I don't quite get you what do you mean by 11 rmb htm asset is like CAO, what do you mean  by 6% interest as this seems to be different from their financial report? Maybe you can provide your proof for your wording why with htm asset is big time speculating?

Most company have held to maturity investment, especially in building industries. They will need vest amount of raw material, and the project is not complete within a short period. Eg. when the contract is sign, the fabrication and manufacturer might take 1 years later to start. Thus to avoid the contract from getting into loss, the company will need to hedge the material price for 1 year, so that the price of material go up the company will still get the material at the same price as 1 year ago, if it go down the company might consider loss the hedging and purchase directly outside or just complete the hedging sales. Similar go to foreign currency, hedgeing might also required.

Every normal individual also have held to maturity investment, insurance, fixed deposit, saving insurance, etc.

dippyboy      ( Date: 19-Mar-2013 02:16) Posted:



If theres a systemic default in the 11b rmb htm asset on the balancesheet, then the 6% interest to be the guarantor of such loan on behalf of the banks to take on all the default risk will make it look foolish since banks earns the other 6% risk free off balancesheet.

  Always fishy when a company went big time to speculate big on its non-core business. Sounds like another CAO if the credit bubble implodes in china. Its cheap for a good reason ........
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dippyboy
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19-Mar-2013 02:16     
 
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If theres a systemic default in the 11b rmb htm asset on the balancesheet, then the 6% interest to be the guarantor of such loan on behalf of the banks to take on all the default risk will make it look foolish since banks earns the other 6% risk free off balancesheet.

  Always fishy when a company went big time to speculate big on its non-core business. Sounds like another CAO if the credit bubble implodes in china. Its cheap for a good reason ........
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cheongsl
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18-Mar-2013 22:25     
 
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 Alert Admin 		Yup shorting is investing also, if you do proper planing. But I don't short as the room for loss might be much higher then long, and I don't have confidence that my view will correct most of the time, as there are always 10% or 15% probability scenario that turn into the other way.

iPunter      ( Date: 14-Mar-2013 13:32) Posted:



Shorting is method of investing...

The shorter invests his money (margin) with the intention to cover his position when profits are made.

Longers are also well known to lose a lot of money in stocks. So whether one goes long or short, it is still an investment choice, the aim of investment being to grow one's money. One can gorw one's money by shorting. If this is not true, then no one will be playing short.

Furthermore, shorts also provide added liquidity to the market, which is desirable.


Sporeguy      ( Date: 14-Mar-2013 10:55) Posted:

Shorting  is a few steps closer to gambling
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New123
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18-Mar-2013 22:11     
 
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 Alert Admin 		can accumulate lower at 90 cents.

cheongsl      ( Date: 18-Mar-2013 21:59) Posted:

Get another 10lots today
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cheongsl
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18-Mar-2013 21:59     
 
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 Alert Admin 		Get another 10lots today
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chris168
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18-Mar-2013 14:15     
 
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 Alert Admin 		The lowest price I bought is 0.49 in April  2009 I think, when everything was lelong sale.

chris168      ( Date: 18-Mar-2013 13:44) Posted:



Bought some today. The price is quite attractive.

Unless there's a black swan event, it will not fall too drastically from here...
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chris168
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18-Mar-2013 13:44     
 
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Bought some today. The price is quite attractive.

Unless there's a black swan event, it will not fall too drastically from here...
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