The spin-off will lead to a planned Singapore Exchange (SGX) Mainboard listing, with a placement of up to $250 million to institutional and accredited investors.
The spin-off will likely come sometime in November. Post spin-off, Yangzijiang Financial will retain its investments, fund management business and debt investments in China, notes Lim.
She writes: “The above transaction will lower Yangzijiang Financial’s consolidated net tangible assets (NTA) from $4.07 billion to $1.87 billion and its FY2024 earnings per share (EPS) from 8.66 cents to 3.51 cents, with no change to its issued share capital of 3.48bn shares. Assets to be spun off accounted for around 53.7% of the group’s net asset value (NAV) and 56.0% of its net profit in 1HFY2025.”
According to Yangzijiang Financial, Yangzijiang Maritime will become a “pure-play” maritime platform focused on maritime investments and services, loan services and imports and exports.
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These cover ship agency shipbroking, ship leasing, sales facilitation, direct vessel investments, ship chartering, ship financing services, pre-delivery loans and finally, the distribution of merc8hant ships and offshore engineering products and equipment.
The target assets under management (AUM) for Yangzijiang Maritime will be US$1 billion ($1.28 billion), of which the company has deployed around US$680 million.
Other positives include Yangzijiang Financial’s inclusion to the Straits Times Index (STI) reserve list following the latest semi-annual review changes to the FTSE Straits Times Index Series.
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Another plus is Yangzijiang Financial’s $100 million commitment that would anchor Singapore ICH Asset Management’s investment fund targeting Singapore small-to-mid-cap companies and complementing the Equity Market Development Programme (EQDP).
Lim’s target price is now based on a sum-of-the-parts (SOP) formula, a departure from the previous blended price-to-book value ratio (P/BV) and price-to-earnings ratio (P/E) valuations. Her new target price is based on Yangzijiang Financial’s 2026 P/BV of one times for its maritime fund and 0.8 times its 2026 P/B for its remaining business. The maritime fund multiple is pegged to the average of Hong Kong- and Singapore-listed fund management companies, while the latter is pegged to the valuations of Chinese banks.
To this end, Lim believes improvements in China’s real estate sector could re-rate Yangzijiang Financial’s remaining business in the medium term while “significant fair value losses of investments from an unexpected market slowdown” are downside risks.
As at 11.34am, shares in Yangzijiang Financial are trading 2 cents higher or 1.84% up at $1.11.
