Yangzijiang expects to list proposed spin-off by end-April, subject to shareholders' approval

YANGZIJIANG Shipbuilding's proposed spin-off of the group's investment segment could be listed on the Singapore Exchange by the end of this month, if shareholders give their approval next week, the mainboard-listed company said in a bourse filing on Friday (Apr 15).

This is contingent on the outcome of the company's extraordinary general meeting on Monday, where shareholders are set to vote on the proposed Yangzijiang Financial Holdings (YZJFH) and its listing, BS6 : BS6 0% said in response to queries from the Securities Investors Association Singapore (SIAS).

Asked about any significant risks that may delay or derail the spinoff and the listing, the company said it does not expect significant risks in operational changes that may do so, although it is still subject to "potential adverse macroenvironmental changes".

YZJFH will be helmed by Ren Yuanlin, who is the father of Yangzijiang's executive chairman and CEO Ren Letian.

Yangzijiang's share price has been on the climb particularly after the shipbuilder announced late last month that it had increased the share capital of YZJFH.

Separately, SIAS also asked Yangzijiang about the Covid-19 situation at the group's shipyards in Jiangsu.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Jiangsu is currently not under lockdown and the situation is less severe than certain parts of China, such as Shanghai, it said.

However, other restrictions have resulted in disruptions to its operations. This includes mobility restrictions on cross-city movements that have affected the movement of staff and the transportation of raw materials across cities.

Although shipyard operations remain smooth, the group said productivity at its shipyards have decreased, adding that it will continue to mitigate potential disruptions to its business operations.

It also said it remains on track to meet its delivery schedule for the first half of 2022, adding that it will monitor the situation closely.

Meanwhile, higher steel prices have accounted for the bulk of the rise in raw material costs in financial year 2021, the group said. During that period, Yangzijiang's gross profit margin fell to 12 per cent, from 21 per cent in FY2020.

"However, there are no instruments to allow the Group to hedge its steel input costs in China and the Group purchases steel three to six months ahead of construction of vessels," the company said.

It said the group hedges approximately 40 per cent of its US dollar (USD) exposure, given that the bulk of its orderbook are USD-denominated contracts.

The group also has a natural USD hedge for about 20 per cent of the contract value as key machinery parts are priced in USD, it added.

The counter closed flat at S$1.64 on Thursday, the last trading day before the long weekend.