Yangzijiang Financial fails to sparkle on trading debut; ComfortDelGro likely to remain on STI

YANGZIJIANG FINANCIAL HOLDING (YZJFH) closed its first day of trading on Thursday (Apr 28) at S$0.62 – representing a discount of nearly 43 per cent to its net tangible asset (NTA) per share of around S$1.08.

YZJFH had opened at a share price of S$0.69 as it made its trading debut on the Singapore Exchange (SGX) mainboard on Thursday afternoon.

About 170.1 million shares worth S$106.6 million were traded on its first day.

YZJFH was spun off from Straits Times Index (STI) constituent Yangzijiang Shipbuilding . The spin-off and separate listing of the investment segment was initiated with the aim of unlocking value for the company’s shareholders.

Shareholders in Yangzijiang Shipbuilding received shares of YZJFH via a dividend in-specie on a one-to-one basis. No capital was raised through a public offering or private placement in YZJFH’s listing.

Prior to the investment unit spin-off, Yangzijiang Shipbuilding had a market capitalisation of around S$6.1 billion and its last traded share price of S$1.54 prior to going ex-entitlement was around 80 per cent of its book value.

Yangzijiang Shipbuilding shares traded on an ex-entitlement basis on Apr 22, and closed with a share price of S$0.965 on that day. The counter closed at S$0.89 on Apr 28, up 1.1 per cent from Wednesday's close.

As a component of Yangzijiang Shipbuilding, YZJFH will be included in the STI on its debut. Index provider FTSE Russell has announced that all constituents will be ranked by their full market capitalisations on Thursday, and the smallest constituent will be removed effective May 5.

ComfortDelGro was the smallest STI component on Wednesday, with a market capitalisation of S$3.2 billion, based on its closing price of S$1.48, Bloomberg data showed. Meanwhile, Yangzijiang Shipbuilding was the second-smallest STI counter, with a S$3.5 billion market capitalisation.

For YZJFH to avoid deletion, it will need to trade at or higher than S$0.825 per share at the close of trading on Apr 28 while ComfortDelGro trades at S$1.49 per share or lower, insight provider Brian Freitas of Periscope Analytics, who publishes on Smartkarma wrote in a note on Apr 22.

YZJFH’s closing price on Thursday would give it a market capitalisation of under S$2.5 billion, making it the smallest counter on the STI. ComfortDelGro shares closed at S$1.47, down 0.7 per cent on Thursday, giving it a market capitalisation of S$3.2 billion.

YZJFH presently has 60 per cent of its portfolio in private credit, 20 per cent in private equity and funds, and another 20 per cent in cash - all in China, The Business Times previously reported.

To diversify risks across geographies and asset classes, as well as increase product offerings, its bondholding will be reduced to 30 per cent, private equity and fundholding will rise to 40 per cent, while offshore investment will go up from zero to 20 per cent by 2023, chief executive officer and chief investment officer Vincent Toe said .

The group will generate income from 2 areas: fee income (from fund management and wealth management), and investment returns. Sectors the company will target include high-technology; healthcare; environmental, social and governance (ESG); and cleantech.