YZJ Fin Hldg    Last:0.225   -

YZJFH - potentially rewarding

Excellent disclosure. Thanks @volvo. 

 

Many thanks

volvo125      ( Date: 07-Dec-2022 19:18) Posted: Page 119~135 of the Introductory Document has provided a very good description of the DI business. Page 125 has specific info on the collateral policy :- _______   Our Group recorded non-performing loan ratios on debt investments (at amortised costs) of 14.8%, 17.2% and 16.3% in FY2019, FY2020 and FY2021, respectively. Our Group has underperformed comparable peers which had an average of 4.9%, 3.0% and 2.6% in FY2018, FY2019 and FY2020, respectively. The higher non-performing loan ratios are due to our Group&rsquo s more prudent stance in providing for loss allowance. To safeguard our Group&rsquo s interest in the event of default, our Group has obtained collaterals from the end-borrowers through third party financial institutions for the majority of the loans. Such collaterals are project specific and cannot be used for any other purpose. As such, our Group is thus the ultimate beneficiary of the collaterals. Debt investments (at amortised costs) with collaterals have loan-to-value of an average of 46.09% from their borrowers (implying collateral coverage ratio of 1.96 times). Including the debt investments (at amortised costs) without collateral, the loan-to-value is an average of 75.0% from their borrowers (implying collateral coverage ratio of 1.21 times). Nonetheless, the majority of the debt investments (at amortised costs) without collateral include borrowers&rsquo guarantees from end-borrowers which comprise government-related entities and reputable large corporations _______ YFH DI has between 1.96x to 1.2x collateral coverage. Collaterals are secured from Borrowers, as well as from End-Borrowers through 3rd party financial instituitions. For those DI without collaterals, these are likely loans to govt linked entities and reputable large corp that are instead covered by Borrowers guarantee. Such govt linked coy and reputable large corp are likely deemed to have a high safety margin. Based on CIMB latest report, YFH collaterals now has a coverage of 2.3x. I believe YFH has raise the collateral coverage to 2.3x in 2022. YFH has low utilisation of impairment provision and a high recovery rate on NPL based on historical track record. But this is still historical track record and may not neccessarily reflect the current financial situation in China. In the very worst case that all the $777m NPL have to be written off, the ~2.3x would likely square off the write offs even if the collaterals were to devalue by 50% to distress level.

 

Can't thank you enough for yr diligence & analysis. Much appreciated

volvo125      ( Date: 07-Dec-2022 19:18) Posted: Page 119~135 of the Introductory Document has provided a very good description of the DI business. Page 125 has specific info on the collateral policy :- _______   Our Group recorded non-performing loan ratios on debt investments (at amortised costs) of 14.8%, 17.2% and 16.3% in FY2019, FY2020 and FY2021, respectively. Our Group has underperformed comparable peers which had an average of 4.9%, 3.0% and 2.6% in FY2018, FY2019 and FY2020, respectively. The higher non-performing loan ratios are due to our Group&rsquo s more prudent stance in providing for loss allowance. To safeguard our Group&rsquo s interest in the event of default, our Group has obtained collaterals from the end-borrowers through third party financial institutions for the majority of the loans. Such collaterals are project specific and cannot be used for any other purpose. As such, our Group is thus the ultimate beneficiary of the collaterals. Debt investments (at amortised costs) with collaterals have loan-to-value of an average of 46.09% from their borrowers (implying collateral coverage ratio of 1.96 times). Including the debt investments (at amortised costs) without collateral, the loan-to-value is an average of 75.0% from their borrowers (implying collateral coverage ratio of 1.21 times). Nonetheless, the majority of the debt investments (at amortised costs) without collateral include borrowers&rsquo guarantees from end-borrowers which comprise government-related entities and reputable large corporations _______ YFH DI has between 1.96x to 1.2x collateral coverage. Collaterals are secured from Borrowers, as well as from End-Borrowers through 3rd party financial instituitions. For those DI without collaterals, these are likely loans to govt linked entities and reputable large corp that are instead covered by Borrowers guarantee. Such govt linked coy and reputable large corp are likely deemed to have a high safety margin. Based on CIMB latest report, YFH collaterals now has a coverage of 2.3x. I believe YFH has raise the collateral coverage to 2.3x in 2022. YFH has low utilisation of impairment provision and a high recovery rate on NPL based on historical track record. But this is still historical track record and may not neccessarily reflect the current financial situation in China. In the very worst case that all the $777m NPL have to be written off, the ~2.3x would likely square off the write offs even if the collaterals were to devalue by 50% to distress level.

 

Page 119~135 of the Introductory Document has provided a very good description of the DI business. Page 125 has specific info on the collateral policy :-

_______
  Our Group recorded non-performing loan ratios on debt investments (at amortised costs) of 14.8%, 17.2% and 16.3% in FY2019, FY2020 and FY2021, respectively. Our Group has underperformed comparable peers which had an average of 4.9%, 3.0% and 2.6% in FY2018, FY2019 and FY2020, respectively. The higher non-performing loan ratios are due to our Group&rsquo s more prudent stance in providing for loss allowance. To safeguard our Group&rsquo s interest in the event of default, our Group has obtained collaterals from the end-borrowers through third party financial institutions for the majority of the loans. Such collaterals are project specific and cannot be used for any other purpose. As such, our Group is thus the ultimate beneficiary of the collaterals. Debt investments (at amortised costs) with collaterals have loan-to-value of an average of 46.09% from their borrowers (implying collateral coverage ratio of 1.96 times). Including the debt investments (at amortised costs) without collateral, the loan-to-value is an average of 75.0% from their borrowers (implying collateral coverage ratio of 1.21 times). Nonetheless, the majority of the debt investments (at amortised costs) without collateral include borrowers&rsquo guarantees from end-borrowers which comprise government-related entities and reputable large corporations
_______

YFH DI has between 1.96x to 1.2x collateral coverage. Collaterals are secured from Borrowers, as well as from End-Borrowers through 3rd party financial instituitions. For those DI without collaterals, these are likely loans to govt linked entities and reputable large corp that are instead covered by Borrowers guarantee. Such govt linked coy and reputable large corp are likely deemed to have a high safety margin.

Based on CIMB latest report, YFH collaterals now has a coverage of 2.3x. I believe YFH has raise the collateral coverage to 2.3x in 2022.

YFH has low utilisation of impairment provision and a high recovery rate on NPL based on historical track record. But this is still historical track record and may not neccessarily reflect the current financial situation in China. In the very worst case that all the $777m NPL have to be written off, the ~2.3x would likely square off the write offs even if the collaterals were to devalue by 50% to distress level. 
 

 

Nothing much on YZJFH stock price 2 days after the higher NPL reported. Guess market alrdy factor into stock price, SSB did not reboot, guess more price influencing news popping later.
Gona watch out for old Ren increasing his personal stake, he already very close to 30% take over level. Mine guess is he might make offer to buy out both foreign hedge funds holding of 4.9% and 2% to remove hedging activities on YZJFH.
By buying out thos hedge funds,  hedging on YZJFH would reduce drastically, volume might drop to low level easier for SBB to push up stock.
There limitation on how much SSB can do but no limit on individual stake players.

 

Yea, NPL provision is tricky and offers wide creative accounting options!
Depending on the claassification, it can affect the revenue significantly...

volvo125      ( Date: 07-Dec-2022 13:33) Posted: Not exactly. It is a mix. Besides the NPL, YFH seems doing better than expected in 3Q with NPAT 61m, assuming YFH is quoting Nav 1.0923 with the correct reference of 3744m o/s, which I believe they should. CIMB guided YFH earlier with FY2022 NPAT $220m. YFH 1H2022 was $136m. At 3Q NPAT $61m, YFH will likely beat the $220m target. The sudden increase in NPL to $777m is certainly a baffling concern. YFH NPL average ~16% between 2019 to 2021 before spin off but utilisation of allowance for impairment was quite low at only 12% and 2% in 2019 and 2021 respectively.  So this infers that NPL in YFH does not necessarily lead to write off and the recovery rate was high.  Only time will tell how these NPL will evolve and we outsider cant really comment ....   Maxgrow68      ( Date: 07-Dec-2022 03:37) Posted: Wow!  Thanks vm Bro for time and effort in sharing your analysis and interpretation of the 3Q report. Based on your rework numbers and interpretation, it appears the financial condition of YFH has deterioriated significantly overall !! Hmmm....what the next step for investors?

 

Not exactly. It is a mix.

Besides the NPL, YFH seems doing better than expected in 3Q with NPAT 61m, assuming YFH is quoting Nav 1.0923 with the correct reference of 3744m o/s, which I believe they should.

CIMB guided YFH earlier with FY2022 NPAT $220m. YFH 1H2022 was $136m. At 3Q NPAT $61m, YFH will likely beat the $220m target.

The sudden increase in NPL to $777m is certainly a baffling concern. YFH NPL average ~16% between 2019 to 2021 before spin off but utilisation of allowance for impairment was quite low at only 12% and 2% in 2019 and 2021 respectively.  So this infers that NPL in YFH does not necessarily lead to write off and the recovery rate was high. 

Only time will tell how these NPL will evolve and we outsider cant really comment ....

 

Maxgrow68      ( Date: 07-Dec-2022 03:37) Posted: Wow!  Thanks vm Bro for time and effort in sharing your analysis and interpretation of the 3Q report. Based on your rework numbers and interpretation, it appears the financial condition of YFH has deterioriated significantly overall !! Hmmm....what the next step for investors?   volvo125      ( Date: 07-Dec-2022 02:16) Posted: Based on the indicative numbers quoted in the 3Q report, I shall attempt to rework the crude P& L and Balance Sheet based on the indicative numbers given in the 3Q :-   A)    Summary a.    YFH likely registered 3Q NPAT at ~$61m.  Steady state NPAT was ~$320m based on pure DI and prior to spin off, so average quarterly NPAT = 320 / 4 = ~$80m. b)    RMB devaluation against SGD and NPL provision almost wiped out the 206m shares SBB benefits on Nav. 3Q NPAT lifted the Nav back up to 1.0923. c)    CIMB issued an update but the report was still strangely using 3951m shares as reference. The P& L and Balance sheet were also not duly updated, Please read with caveat.   d)    $777m NPL seems scary but only $14.8m seems really bad that needs provisions and these DIs are backed by 1.3x collaterals. I&rsquo m not expert so unable to comment on the recovery process further. e).    This work paper relies very much on the Nav 1.092 provided by YFH and it is reasonable to assume this nav 1.092 must be based on the number of shares that were outstanding as at 30Sep2022, which was worked out to be 3744m. If YFH was still (erroneously) using the 3937m shares outstanding as at 30Jun2022 (just like CIMB was still using 3951m shares to update its report), then the 3Q report is garbage, and this work paper will also be garbage. f)      My accounting interpretations may not be completely correct, and there could be computation errors. Any bro could correct the numbers if you have accounting reasons to amend.   B)    Workings 1.  YFH Balance Sheet :- Nav increased from 107.45 to 109.23. 1a) Nav +    Old Nav 1.0745 was referenced to 3937m shares as at 30Jun2022. Net Asset was $4230m. +    Latest Nav 1.0923 in the 3Q report is referenced to 3744m shares as at 30Sep2022. YFH spent ~$79.62m to SBB 206m shares as at 30Sep2022 ( You will get these numbers if you use an excel worksheet to tabulate all the SBB quantities and values records until 30Sep2022 ). +    Latest Net Asset = 1.0923 * 3744 = $4089m as at 30Sep2022. +    The theoretical Nav per share of YFH as at 30Sep2022 based on just the SBB exercise alone should equate to (4230m &ndash 79.62m) / 3744 = 1.1085, assuming there is no RMB/SGD devaluation, net losses, or other unforeseen liabilities such as the one time deferred tax liabilities of undistributed income due to the spin off exercise. +    So there is actually a drop in Nav = 1.1085 &ndash 1.0923 = 0.01624 per share or ~$61m (down) after accounting for the SBB effect. +    Please note that latest Nav 1.0923 or Net Asset $4089m in the balance sheet is already net of SBB, RMB devaluation, NPL provisions and also the net profit/loss embedded in kinds in the current and non current assets.   1b)  RMB vs SGD ( Impact on reporting ) +    RMB down ~2.9% against SGD (exchange rate 4.82 on 30Jun2022 vs 4.96 on 30Sep2022) +    $511m or 12% of group asset was still reflected in the balance sheet as at 30Sep2022 for offshore deployment. This should exclude the $79.62m already spent on SBB. +    Net asset in RMB converted to SGD for reporting = 4089 &ndash 511 = $3578m, which included a translation loss of RMB to SGD of 2.9% = (3578 / 0.971) * 0.029 = ~$107m   1c) AUM Note : AUM is not same as Nav. AUM is all the assets that the coy could deploy to earn incomes. Nav is simply total assets net of total liabilities.   +    Net NPL is $762.7m or 31.5% of total DI. Total DI = 762.7 / 0.315 = $2421m +    DI is 56% of total portfolio. +    Hence Total portfolio or AUM = 2421 / 0.56 = $4323m as at 30Sep2022, which is net of the $79.62m spent on SBB, the $14.8m provision for NPL and fair value adjustments. +    AUM was $4440m as at 30Jun2022. +    There is a drop in AUM = 4440 &ndash 4323 = ~$117m, which is likely due mainly to the RMB devaluation against SGD.   My Interpretation :- +    Assuming no other significant impact on the balance sheet except the (1) SBB, (2) RMB/SGD exchange rate, (3) NPL provision, (4) 3Q earning. +    Theoretical Nav with SBB as at 30Sep2022 = 1.1084 * 3744m = $4150m (after SBB 206m shares) +    Actual Nav as at 30Sep2022 in 3Q report = 1.0923 * 3744m = $4089m is net of SBB, RMB devaluation, NPL provision and 3Q earning. +    There is a drop in Nav = 4150 &ndash 4089 = $61m, BUT Nav should drop more than $61m due to the $107m RMB devaluation loss and $14.8m NPL provisions, UNLESS there is a net gain that reduced this impact. +    With SBB already accounted for, actual Nav should drop or increase by   (-107m) + (-14.8m) + (net earning) +    Hence 4089m = 4150m &ndash 107m &ndash 14.8m   + net earning +    Therefore Net earning in 3Q = $60.8m

 

There was a $536m DI retained back at YZJ prior to the spin off due to various issue (legality, novation, litigations ..) so as to given YFH a clean start. This explains why the average ~16% NPL between 2019 to 2021 was reduced to 1~2% in 1H2022. 

Yes, the utilisation of impairment allowance was quite low in 2019 to 2021, and because the definition of NPL in YFH is very stringent, so NPL does not leading lead to full default. May be that was the reason why only $14.8m was added to the provision.

emailpeter      ( Date: 07-Dec-2022 11:59) Posted: @volvo, thanks for your great digestion of projections. I wish to add something, in addition to what I previously commented. The half yearly fin reports give an explanation note : Debt Investments at amortised cost. We will need to relook back at the last 3 years of the PL, UPL, NPL ratios and absolutes to digest the seriousness of the $777m NPL. Looking at previous half year, they seem to also carry a high NPL ratio at close of year. As compared to mid year. Huge big differences. We need to chart out the pattern. And relook at their perculiar definition of NPL. Then come to some meaningful conclusion. My gut feeling could be their NPL figures do not lead to full defaults, as they classify it as "immediately past due" rather than allow a certain grace period. We need to see how the NPL gets reclassified after period, to determine if they defaulted. Never the less, their recent update did disclose the challenging (excruciating) difficult times they are facing in recovery. So I guess a big part of it is real.

 

With so much ' negativity' yet the price hardly moved. Big boys really want to lure retailers to buy at this price before flushing down to 300? I don' t understand why the price is holding steady with bad 3Q update and ' sentiment' of overall bad performance in long term. 

 

I was quite surprised to work out the NPAT at $61m inspite of the income streams problem on the affected NPL portion, the additional $14.8m NPL provision, and weak Shanghai and Shenshen markets that woud incur more negative fair value adjustment to the PE investments. I was expecting much lower but I do not think YFH is stupid enough to quote the latest Nav 1.0923 with the old 3937m o/s. 

However, if YFH was quoting (again erroneously) the Nav 1.0923 with reference to the latest 3691m o/s as at 31Oct2022, then the net asset would equate to 1.0923 * 3691 = $4032m. Then netting off the ~$107m RMB devaluation and $14.8m NPL provision will give a near breakeven NPAT $3.8m. I hope the CFO LiuHua didnt make this referencing mistake.

Not sure how you arrive at 4Q NPAT $55m but I would see more progressive +ve sides in 4Q due to the significant recovery in the SH and SZ markets, the easing of credit by the CCCP and the easing of covid restrictions. Unless more NPL provisions have to be pledged in 4Q, your 4Q projection is reasonable if 3Q NPAT $61m is indeed valid as a reference.

On NPL, YFH website stated : Collateral coverage ratio for DI (at amortised costs) : 1.3x  as at 31 dec 2021. Based on CIMB indicated 2.3x taken at BV, YFH could have raised the collateral to 2.3x for the new DI added in 2022, but the 31% NPL DI could have been the older batches taken in during 2H2021 with 1.3x. 

YFH NPL average ~16% between 2019~2021 before spin off, but only 12% and 2% of the allowance for impairment loss were used in 2019 and 2021 respectively, so the recovery seems still very good. According to YFH 1H2022 report, a loan is classified as NPL once principal payments are passed due VS industry standard of > 90d.

As at 30Jun2022, Total UPL (underperforming) + NPL was = $162m + $52m = $215m, so there was a sudden increase of $562m NPL in 3Q and the $162m UPL had also turned NPL.

Only time will tell how these $777m NPL will be sorted out, either via new payment terms, via partial or full recovery via collateralised assets seizure, or write off partially or completely .... etc we outsiders can' t really comment ...


 

emailpeter      ( Date: 07-Dec-2022 03:23) Posted: I will do some estimates based on your projections. Feel free correct my assumptions.   Q1+Q2      136 Q3 (e)          61 Q4 (e)          55 NPAT        252m   O/S Shares          3950 Less SBB (90%)   355 Net O/S              3595m   Est EPS 252/3595 = $0.07 Est PER (0.34)       = 4.8x Est Div% (40%)      = 0.028 / 0.34 = 8.2% Effective Div%        = 0.028 / 0.45 = 6.2% * * each investor can base on own ave cost. In my case its $0.45.   " d)    $777m NPL seems scary but only $14.8m seems really bad that needs provisions and these DIs are backed by 1.3x collaterals. I' m not expert so unable to comment on the recovery process further."   I' m also not an expert on this area, CIMB' s mention of 2.3x is taken at book values by FH, it would be a struggle to make accurate liquidation valuations of each land parcel owing to this volatile (downward) market. Furthermore, that ratio is on a grand total basis, in all likelihood the NPL loans would naturally cover the weaker land parcels, they might well be in major loan deficit. The plus would be most of the loan would have been paid back, leading to small amounts at NPL. We are just blindly guessing here.   I can' t see how they can make full recovery of all maturing loans, and not any rollovers. Credit to marginal companies are the hardest at this recessionary juncture.   It can be safely assumed, any large impending writeoff of NPL' s will be a huge major hit to yearend NPAT.

 

@volvo, thanks for your great digestion of projections. I wish to add something, in addition to what I previously commented.

The half yearly fin reports give an explanation note : Debt Investments at amortised cost.
We will need to relook back at the last 3 years of the PL, UPL, NPL ratios and absolutes to digest the seriousness of the $777m NPL. Looking at previous half year, they seem to also carry a high NPL ratio at close of year. As compared to mid year. Huge big differences.

We need to chart out the pattern. And relook at their perculiar definition of NPL. Then come to some meaningful conclusion. My gut feeling could be their NPL figures do not lead to full defaults, as they classify it as "immediately past due" rather than allow a certain grace period. We need to see how the NPL gets reclassified after period, to determine if they defaulted.

Never the less, their recent update did disclose the challenging (excruciating) difficult times they are facing in recovery. So I guess a big part of it is real.

 

Right, have been holding since Day 1 from the spinoff having faith in the company...
Now being rewarded by value fallen to more than 50% and still being short down everyday !!
Wonder what the Mgt and Ren are thinking and/or doing to protect the Co and its SH who supported them ?
 

vicloo      ( Date: 07-Dec-2022 06:37) Posted: My 2cent is hold and wait until all dusts settle down if you want to invest long term on it. Don't add more. OR just cut loss and move on. Maxgrow68      ( Date: 07-Dec-2022 03:37) Posted: Wow!  Thanks vm Bro for time and effort in sharing your analysis and interpretation of the 3Q report. Based on your rework numbers and interpretation, it appears the financial condition of YFH has deterioriated significantly overall !! Hmmm....what the next step for investors?

 

Delay transfer out of cny to sgd or USD is good as china open up from COVID-19 the cny will recover. Meanwhile they can also take a ride on china share market recovery.

john1703      ( Date: 07-Dec-2022 08:43) Posted: I saw CIMB report and quote the following. It seems it is delaying the transfer till end-January 2023. " At its listing in April, YZJFH had targeted to transfer $1 billion to Singapore by end-FY2022. Tan and Lim think some $610 million has been transferred as at end-3QFY2022, including $99 million spent on share buybacks, and transfer of the remaining sum has been delayed to end-January 2023."

 

From a layman' s perspective, the price is already heavily discounted (i.e. from listing price of $0.69 to the current $0.34). If they can list at $0.69, the company must be worth that much or at least around that range. If your company is worth $0.10, I don' t think SGX will allow it to list at $0.69. Since YZJSH decided to spin-off and form YZJFH which received 60% of YZJSH' s asset, I don' t think the management is so dumb to let the business fail. They will be the ultimate losers. With the continuous hiring of talents, I suppose, their profitability should goes up once the economy recovers. I reckon they just chose the wrong time to spun off and probably without building a robust foundation for the business prior to the spin-off. Just my personal perspective 

 

Looks like market has discounted this negative news .

 

I saw CIMB report and quote the following. It seems it is delaying the transfer till end-January 2023.

" At its listing in April, YZJFH had targeted to transfer $1 billion to Singapore by end-FY2022. Tan and Lim think some $610 million has been transferred as at end-3QFY2022, including $99 million spent on share buybacks, and transfer of the remaining sum has been delayed to end-January 2023."

 

sgdcny exchange rate drop from end jun 4.8 to end sep 4.96 and continue to drop to 5.23 on 28 nov.
reversal is happening and likely to move towards 4.6 in future as china changes their covid-19 measures. they now call it flu. so current write down due to excahnge rate will be write back later.just hope they cement the 50/50 curency split slowly to max the recovery of cny.  current market wager seems to be more on jpy recovery.
remember that they hold a lot of cash and as equities recover they just need to put money to work and that will give good return later. just my wishful thinking.
dyodd

 

Nice analysis bro Volvo125, now the big question is whether the current price is reflective of this negative piece of news 

 

My 2cent is hold and wait until all dusts settle down if you want to invest long term on it. Don't add more.

OR just cut loss and move on.

Maxgrow68      ( Date: 07-Dec-2022 03:37) Posted: Wow!  Thanks vm Bro for time and effort in sharing your analysis and interpretation of the 3Q report. Based on your rework numbers and interpretation, it appears the financial condition of YFH has deterioriated significantly overall !! Hmmm....what the next step for investors?   volvo125      ( Date: 07-Dec-2022 02:16) Posted: Based on the indicative numbers quoted in the 3Q report, I shall attempt to rework the crude P& L and Balance Sheet based on the indicative numbers given in the 3Q :-   A)    Summary a.    YFH likely registered 3Q NPAT at ~$61m.  Steady state NPAT was ~$320m based on pure DI and prior to spin off, so average quarterly NPAT = 320 / 4 = ~$80m. b)    RMB devaluation against SGD and NPL provision almost wiped out the 206m shares SBB benefits on Nav. 3Q NPAT lifted the Nav back up to 1.0923. c)    CIMB issued an update but the report was still strangely using 3951m shares as reference. The P& L and Balance sheet were also not duly updated, Please read with caveat.   d)    $777m NPL seems scary but only $14.8m seems really bad that needs provisions and these DIs are backed by 1.3x collaterals. I&rsquo m not expert so unable to comment on the recovery process further. e).    This work paper relies very much on the Nav 1.092 provided by YFH and it is reasonable to assume this nav 1.092 must be based on the number of shares that were outstanding as at 30Sep2022, which was worked out to be 3744m. If YFH was still (erroneously) using the 3937m shares outstanding as at 30Jun2022 (just like CIMB was still using 3951m shares to update its report), then the 3Q report is garbage, and this work paper will also be garbage. f)      My accounting interpretations may not be completely correct, and there could be computation errors. Any bro could correct the numbers if you have accounting reasons to amend.   B)    Workings 1.  YFH Balance Sheet :- Nav increased from 107.45 to 109.23. 1a) Nav +    Old Nav 1.0745 was referenced to 3937m shares as at 30Jun2022. Net Asset was $4230m. +    Latest Nav 1.0923 in the 3Q report is referenced to 3744m shares as at 30Sep2022. YFH spent ~$79.62m to SBB 206m shares as at 30Sep2022 ( You will get these numbers if you use an excel worksheet to tabulate all the SBB quantities and values records until 30Sep2022 ). +    Latest Net Asset = 1.0923 * 3744 = $4089m as at 30Sep2022. +    The theoretical Nav per share of YFH as at 30Sep2022 based on just the SBB exercise alone should equate to (4230m &ndash 79.62m) / 3744 = 1.1085, assuming there is no RMB/SGD devaluation, net losses, or other unforeseen liabilities such as the one time deferred tax liabilities of undistributed income due to the spin off exercise. +    So there is actually a drop in Nav = 1.1085 &ndash 1.0923 = 0.01624 per share or ~$61m (down) after accounting for the SBB effect. +    Please note that latest Nav 1.0923 or Net Asset $4089m in the balance sheet is already net of SBB, RMB devaluation, NPL provisions and also the net profit/loss embedded in kinds in the current and non current assets.   1b)  RMB vs SGD ( Impact on reporting ) +    RMB down ~2.9% against SGD (exchange rate 4.82 on 30Jun2022 vs 4.96 on 30Sep2022) +    $511m or 12% of group asset was still reflected in the balance sheet as at 30Sep2022 for offshore deployment. This should exclude the $79.62m already spent on SBB. +    Net asset in RMB converted to SGD for reporting = 4089 &ndash 511 = $3578m, which included a translation loss of RMB to SGD of 2.9% = (3578 / 0.971) * 0.029 = ~$107m   1c) AUM Note : AUM is not same as Nav. AUM is all the assets that the coy could deploy to earn incomes. Nav is simply total assets net of total liabilities.   +    Net NPL is $762.7m or 31.5% of total DI. Total DI = 762.7 / 0.315 = $2421m +    DI is 56% of total portfolio. +    Hence Total portfolio or AUM = 2421 / 0.56 = $4323m as at 30Sep2022, which is net of the $79.62m spent on SBB, the $14.8m provision for NPL and fair value adjustments. +    AUM was $4440m as at 30Jun2022. +    There is a drop in AUM = 4440 &ndash 4323 = ~$117m, which is likely due mainly to the RMB devaluation against SGD.   My Interpretation :- +    Assuming no other significant impact on the balance sheet except the (1) SBB, (2) RMB/SGD exchange rate, (3) NPL provision, (4) 3Q earning. +    Theoretical Nav with SBB as at 30Sep2022 = 1.1084 * 3744m = $4150m (after SBB 206m shares) +    Actual Nav as at 30Sep2022 in 3Q report = 1.0923 * 3744m = $4089m is net of SBB, RMB devaluation, NPL provision and 3Q earning. +    There is a drop in Nav = 4150 &ndash 4089 = $61m, BUT Nav should drop more than $61m due to the $107m RMB devaluation loss and $14.8m NPL provisions, UNLESS there is a net gain that reduced this impact. +    With SBB already accounted for, actual Nav should drop or increase by   (-107m) + (-14.8m) + (net earning) +    Hence 4089m = 4150m &ndash 107m &ndash 14.8m   + net earning +    Therefore Net earning in 3Q = $60.8m

 

Wow!  Thanks vm Bro for time and effort in sharing your analysis and interpretation of the 3Q report.
Based on your rework numbers and interpretation, it appears the financial condition of YFH has deterioriated
significantly overall !!
Hmmm....what the next step for investors?

 

volvo125      ( Date: 07-Dec-2022 02:16) Posted: Based on the indicative numbers quoted in the 3Q report, I shall attempt to rework the crude P& L and Balance Sheet based on the indicative numbers given in the 3Q :-   A)    Summary a.    YFH likely registered 3Q NPAT at ~$61m.  Steady state NPAT was ~$320m based on pure DI and prior to spin off, so average quarterly NPAT = 320 / 4 = ~$80m. b)    RMB devaluation against SGD and NPL provision almost wiped out the 206m shares SBB benefits on Nav. 3Q NPAT lifted the Nav back up to 1.0923. c)    CIMB issued an update but the report was still strangely using 3951m shares as reference. The P& L and Balance sheet were also not duly updated, Please read with caveat.   d)    $777m NPL seems scary but only $14.8m seems really bad that needs provisions and these DIs are backed by 1.3x collaterals. I&rsquo m not expert so unable to comment on the recovery process further. e).    This work paper relies very much on the Nav 1.092 provided by YFH and it is reasonable to assume this nav 1.092 must be based on the number of shares that were outstanding as at 30Sep2022, which was worked out to be 3744m. If YFH was still (erroneously) using the 3937m shares outstanding as at 30Jun2022 (just like CIMB was still using 3951m shares to update its report), then the 3Q report is garbage, and this work paper will also be garbage. f)      My accounting interpretations may not be completely correct, and there could be computation errors. Any bro could correct the numbers if you have accounting reasons to amend.   B)    Workings 1.  YFH Balance Sheet :- Nav increased from 107.45 to 109.23. 1a) Nav +    Old Nav 1.0745 was referenced to 3937m shares as at 30Jun2022. Net Asset was $4230m. +    Latest Nav 1.0923 in the 3Q report is referenced to 3744m shares as at 30Sep2022. YFH spent ~$79.62m to SBB 206m shares as at 30Sep2022 ( You will get these numbers if you use an excel worksheet to tabulate all the SBB quantities and values records until 30Sep2022 ). +    Latest Net Asset = 1.0923 * 3744 = $4089m as at 30Sep2022. +    The theoretical Nav per share of YFH as at 30Sep2022 based on just the SBB exercise alone should equate to (4230m &ndash 79.62m) / 3744 = 1.1085, assuming there is no RMB/SGD devaluation, net losses, or other unforeseen liabilities such as the one time deferred tax liabilities of undistributed income due to the spin off exercise. +    So there is actually a drop in Nav = 1.1085 &ndash 1.0923 = 0.01624 per share or ~$61m (down) after accounting for the SBB effect. +    Please note that latest Nav 1.0923 or Net Asset $4089m in the balance sheet is already net of SBB, RMB devaluation, NPL provisions and also the net profit/loss embedded in kinds in the current and non current assets.   1b)  RMB vs SGD ( Impact on reporting ) +    RMB down ~2.9% against SGD (exchange rate 4.82 on 30Jun2022 vs 4.96 on 30Sep2022) +    $511m or 12% of group asset was still reflected in the balance sheet as at 30Sep2022 for offshore deployment. This should exclude the $79.62m already spent on SBB. +    Net asset in RMB converted to SGD for reporting = 4089 &ndash 511 = $3578m, which included a translation loss of RMB to SGD of 2.9% = (3578 / 0.971) * 0.029 = ~$107m   1c) AUM Note : AUM is not same as Nav. AUM is all the assets that the coy could deploy to earn incomes. Nav is simply total assets net of total liabilities.   +    Net NPL is $762.7m or 31.5% of total DI. Total DI = 762.7 / 0.315 = $2421m +    DI is 56% of total portfolio. +    Hence Total portfolio or AUM = 2421 / 0.56 = $4323m as at 30Sep2022, which is net of the $79.62m spent on SBB, the $14.8m provision for NPL and fair value adjustments. +    AUM was $4440m as at 30Jun2022. +    There is a drop in AUM = 4440 &ndash 4323 = ~$117m, which is likely due mainly to the RMB devaluation against SGD.   My Interpretation :- +    Assuming no other significant impact on the balance sheet except the (1) SBB, (2) RMB/SGD exchange rate, (3) NPL provision, (4) 3Q earning. +    Theoretical Nav with SBB as at 30Sep2022 = 1.1084 * 3744m = $4150m (after SBB 206m shares) +    Actual Nav as at 30Sep2022 in 3Q report = 1.0923 * 3744m = $4089m is net of SBB, RMB devaluation, NPL provision and 3Q earning. +    There is a drop in Nav = 4150 &ndash 4089 = $61m, BUT Nav should drop more than $61m due to the $107m RMB devaluation loss and $14.8m NPL provisions, UNLESS there is a net gain that reduced this impact. +    With SBB already accounted for, actual Nav should drop or increase by   (-107m) + (-14.8m) + (net earning) +    Hence 4089m = 4150m &ndash 107m &ndash 14.8m   + net earning +    Therefore Net earning in 3Q = $60.8m