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Since it declared a 200mil SBB program 2 years ago, YZJFH has completed ~80% of it. On VB.com, there was previously some discussion on the merits of continuing SBB post FY24 results. 2 weeks ago, I calculated that If YZJFH were to restart SBB at then prices, the value would be earnings yield of ~10% pro forma FY24 results. With this treasury share placement, the earnings yield can be inverted to imply that cost of equity=10%.
The reasons below do not pass my smell test (at least). But I reckon Chairman Ren probably recognizes that YZJFH is "a closed end fund". There are not a lot of opportunities to scale up capital unlike when it was coupled with ship building. And when we look at the past 2 years of cashflow statement, the Maritime Fund (treated as a subsidiary) attracted 150mil of outside capital (LP) and based on an estimation of its capital base of ~580mil, YZJFH's GP share is close to 75% which is really high. The action of placing out your treasury shares at 10% cost of equity may also implement that this GP:LP ratio isn't going to change much.
Yangzijiang Financial places out treasury shares to accelerate growth in maritime investments
Further, as the Sale Shares are Shares held in treasury, they are not income-generating and constrain the Company’s capital efficiency. The Proposed Sale allows the Company to monetise these shares at a premium to their historical acquisition cost, thereby unlocking their dormant value.
The Proposed Sale also strengthens the capital base of the Company and increases the Company’s public float, which will improve the level of trading liquidity of its Shares. This will in turn enable the Company to further attract institutional investors and stabilise its market performance.
https://links.sgx.com/FileOpen/Press%20R...eID=838066
The reasons below do not pass my smell test (at least). But I reckon Chairman Ren probably recognizes that YZJFH is "a closed end fund". There are not a lot of opportunities to scale up capital unlike when it was coupled with ship building. And when we look at the past 2 years of cashflow statement, the Maritime Fund (treated as a subsidiary) attracted 150mil of outside capital (LP) and based on an estimation of its capital base of ~580mil, YZJFH's GP share is close to 75% which is really high. The action of placing out your treasury shares at 10% cost of equity may also implement that this GP:LP ratio isn't going to change much.
Yangzijiang Financial places out treasury shares to accelerate growth in maritime investments
Further, as the Sale Shares are Shares held in treasury, they are not income-generating and constrain the Company’s capital efficiency. The Proposed Sale allows the Company to monetise these shares at a premium to their historical acquisition cost, thereby unlocking their dormant value.
The Proposed Sale also strengthens the capital base of the Company and increases the Company’s public float, which will improve the level of trading liquidity of its Shares. This will in turn enable the Company to further attract institutional investors and stabilise its market performance.
https://links.sgx.com/FileOpen/Press%20R...eID=838066