Yangzijiang Financial - CGS-CIMB Research 2022-06-06: A Force To Be Reckoned With

Yangzijiang Financial - A Force To Be Reckoned With

  • Yangzijiang Financial (SGX:YF8) is the carved-out and spun-off debt investment and investment management division of Yangzijiang Shipbuilding (SGX:BS6). It had S$4.2bn in net book value as of Apr-22, which it also considers as its asset under management (AUM). Together with AUM via engagement for investment advisory services (~S$500m) and the establishment of GEM Asia Growth Fund (~S$60m, S$140m pending),
  • Yangzijiang Financial’s current AUM is S$4.76bn, in our estimate. Yangzijiang Financial aims to grow its total AUM to S$7bn in 3-5 years, according to management. We understand from the management that 75% of its S$4.2bn asset portfolio or ~S$3.15bn has been invested – ~S$2.52bn (60%) in debt investments, and ~S$0.63bn (15%) in private equity funds, as at May-22. Of the balance, ~S$0.42bn (10%) will be gradually invested into Singapore funds, and ~S$0.63bn (15%) will be conserved.
  • Yangzijiang Financial’s current market cap of S$2.1bn is slightly above its ~S$1.8bn of cash by end-FY22 (S$0.46/share). We believe this has not priced in upside potential for AUM and fee income growth.
  • Yangzijiang Financial has established itself in debt investment and the private lending market in China. We believe Yangzijiang Financial can utilise its strong Chinese network to capture China’s growing wealth management market. Together with the newly acquired asset management firm, GEM Asset Management (GEM), we think the group can replicate its success outside China with existing ammunition and by leveraging third-party money to grow its AUM. Yangzijiang Financial intends to deploy ~S$1bn cash into Singapore mainly via Qualified Domestic Limited Partnership (QDLP) and liquidity pool.
  • Initiate coverage on Yangzijiang Financial with target price S$0.74. Yangzijiang Financial raised its dividend payout to 40% on 30 May 2022 (from 30% previously), translating into yield of ~4.15% and 6.24% for FY22F-FY23F.
  • We based our target price on 0.6x CY23F P/BV (comparable to Chinese banks) and 9x CY23F P/E (peer average). We like Yangzijiang Financial as it is the only Singapore mid-size cap proxy to fund management with yield upside of 6.24% by FY23F.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

LIM Siew Khee CGS-CIMB Research | Izabella TAN CGS-CIMB Research | CGS-CIMB Research | https://www.cgs-cimb.com 2022-06-08
SGX Stock Analyst Report ADD INITIATE ADD 0.74 SAME 0.74

Relevant links:
Yangzijiang Financial Analyst Report,
Yangzijiang Financial Target Price,

Yangzijiang Financial Share Price History,
Yangzijiang Financial Announcements,
Yangzijiang Financial Dividends/ Corp Actions,
Yangzijiang Financial News Articles


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