Yangzijiang Financial - CGS-CIMB Research 2022-08-12: Yield Play

Yangzijiang Financial - Yield Play

  • This is Yangzijiang Financial (SGX:YF8)’s first results announcement since its listing on 28 Apr 22. 1H22 revenue of S$173.8m (-27% y-o-y) came in above expectations at 68% of our FY22F. The beat was due to higher-than-expected interest income of S$184.9m (-3% y-o-y), which resulted from higher-than-expected cash deployed.
  • Although Yangzijiang Financial's 1H22 revenue of S$173.8m and net profit of S$136.4m made up 68% and 62% of our FY22F estimates respectively, we expect interest income to decline in 2H22F from 1H22, since
    1. 92% (~S$2.3bn) of its debt investments mature within the next 12 months, and
    2. the management remains cautious in deploying funds amidst challenging market conditions.
  • We estimate that 28% or (~S$0.7bn) of its ~S$2.5bn debt investments will mature by end-FY22F. This brings its cash balance to ~S$1.97bn (S$0.50/share), which exceeds its current market cap of ~S$1.53bn. We continue to like Yangzijiang Financial as the only Singapore mid-size cap proxy to fund management with yield upside of 8.64% by FY23F.
  • Of its S$4.6bn AUM, management guided that S$480m (~10.8%) of AUM have been transferred to Singapore as of 1H22. It intends to transfer 22% of AUM to Singapore by end-FY22F, towards its long-term target of 50%.
  • Yangzijiang Financial's management reinforced its stance to reduce exposure to the sector, save for those that are in collaboration with the Chinese government. Its non-performing loan (NPL) ratio fell from an average of 16% for FY19-21 to 2% in 1H22.
  • No interim dividends were declared by Yangzijiang Financial, although its 40% payout policy still holds. Our target price is based on 0.6x CY23F P/BV (comparable to Chinese banks) and 9x CY23F P/E (peer average).

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 | https://www.cgs-cimb.com 2022-08-12
SGX Stock Analyst Report ADD MAINTAIN ADD 0.740 SAME 0.740

Previous report by CGS-CIMB:
2022-06-06 Yangzijiang Financial - A Force To Be Reckoned With

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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