YZJ Financial right to spin off maritime assets

[SINGAPORE] If you have ever mistaken Yanzijiang (YZJ) Financial for YZJ Shipbuilding while checking their share prices on your phone, get ready for even more potential confusion.

On Nov 18, a company called YZJ Maritime Development is expected to list on the mainboard of the Singapore Exchange (SGX) by way of an introduction. The company invests in a diverse range of vessels through joint ventures with operating partners, and via finance leases. It also provides loans to shipping companies, and is involved in ship agency and ship broking activities.

The company is being spun out of YZJ Financial, in much the same way that YZJ Financial was spun out of YZJ Shipbuilding back in 2022. Under the deal, YZJ Financial will distribute the 3.48 billion shares it holds in YZJ Maritime to its own shareholders on a one-for-one basis.

Last week, YZJ Maritime said it had also signed agreements with SAC Capital and China International Capital Corporation to raise S$5.2 million through a placement of nearly 8.64 million shares at S$0.60 each. This placement price values YZJ Maritime at more than S$2 billion.

YZJ Maritime had a net asset value (NAV) of more than US$1.57 billion (or nearly S$2.04 billion) as at Jun 30, according to its introduction document. The company achieved earnings of US$63.54 million for H1 2025, versus US$68.91 million for H1 2024.

Ren Yuanlin, the largest shareholder of YZJ Shipbuilding and YZJ Financial, and the entrepreneurial force behind the whole group, seems to be paying close attention to YZJ Maritime as it comes to market.

YZJ Maritime’s introduction document lists him as its executive chairman and chief executive officer. Meanwhile, YZJ Financial announced last week that Ren would step down as its executive chairman and CEO with effect from Oct 31.

Taking his place at YZJ Financial are Liu Hua as executive chairman, and Peng Xingkui as CEO. Liu was previously YZJ Financial’s deputy CEO and its chief financial officer, while Peng was head of the investment management department at a key unit of YZJ Shipbuilding.

Ren Letian, who is Ren Yuanlin’s son, is still executive chairman and CEO of YZJ Shipbuilding.

What will become of YZJ Financial now that a big part of it is being spun off as a separate listed company? Will YZJ Maritime be the company within the Ren family’s growing empire to watch over the next few months?

Should investors worry about there being too many companies with YZJ prefixed to their names?

Seizing new opportunities

First of all, it should be pointed out that YZJ Shipbuilding is, by far, the most prominent company within the group. As a component of the Straits Times Index (STI), with a market capitalisation of S$13.11 billion, it has a strong following among analysts and investors.

DBS describes the company as the largest and best-managed private shipbuilder in China, with a 10-percentage-point cost advantage over its competitors, driven by superior project execution and cost control.

Over the past 12 months, its shares have delivered a total return of 40.1 per cent, versus the STI’s total return of 29.5 per cent.

With YZJ Maritime still in its belly, YZJ Financial currently has a market capitalisation of S$3.65 billion. In September, it was elevated to the STI reserve list. It was also the largest component of the iEdge Singapore Next 50 Index, with a weighting of 5.59 per cent.

YZJ Financial has also chalked up a high total return of 175.6 per cent over the past 12 months, driven in part by its plans to spin off its maritime assets. Only two other components of the Next 50 index performed better during the same period – namely, Hong Leong Asia with a total return of 185.5 per cent, and PropNex with a total return of 200.8 per cent.

With YZJ Financial already trading close to its NAV as at Jun 30 of S$1.11 per share, and the imminent carve-out of its maritime assets, further gains seem unlikely in the short term.

Still, after successfully birthing YZJ Maritime, YZJ Financial may move more aggressively in interesting new directions. In its recent circular to shareholders dated Aug 12, the company said it still held troubled real estate debt on its books totalling some 3.8 billion yuan (S$696.7 million), which it plans to realise through judicial auctions.

The company also said on Aug 18 that it has become an anchor investor in a S$100 million fund dedicated to mid and small-cap stocks in Singapore.

On Oct 1, YZJ Financial announced plans to lead a consortium of investors to obtain a 23.36 per cent stake in Shanghai-listed lithium battery giant Ningbo Shanshan Co. The company plans to invest 1.02 billion yuan in the deal.

“With our established presence in both China Mainland and Singapore, the group continues to actively pursue promising opportunities that strengthen its core investment portfolio aiming to effectively deploy its cash reserves to generate sustainable returns to shareholders,” said Ren Yuanlin, in a statement about the deal.

Market support crucial

As for the larger question of whether YZJ Maritime ought to be spun out, this column is inclined to keep an open mind for now.

Some Singapore-listed companies have been known to do U-turns on their spin-offs, of course. CapitaLand spun off its retail property business as a separately listed company called CapitaMalls Asia in 2009 only to take it private in 2014.

Boustead Singapore listed Boustead Projects in 2015, and began trying to take it private in 2023. Boustead Projects was delisted last year.

Yet, these corporate groups have continued taking advantage of opportunities in their fields, and adapting themselves to trends in the market.

For instance, CapitaLand went on to acquire Ascendas-Singbridge in 2019; and launched a group-wide restructuring in 2021 that included its property development arm going private, and its real estate management activities and lodging business remaining listed under what is now known as CapitaLand Investment.

Earlier this week, CapitaLand Investment and Mapletree Investments were reported to be mulling a merger.

On the other hand, Boustead Singapore is now going down the well-trodden path of monetising some of its assets via a real estate investment trust (Reit). The group said in September that the sponsor of the new Reit will be UIB Holdings, in which Boustead Projects holds a 20 per cent stake; and that its initial portfolio will be worth some S$1.9 billion.

With the strong gains charted by the Singapore market over the past two years, it makes lots of sense for YZJ Financial to unlock value by spinning out YZJ Maritime now. In order to maintain the support of the market over the longer term, however, both YZJ Financial and YZJ Maritime will need to steadily deliver shareholder value.