Yangzijiang Financial Holdings YF8 has reported earnings of $25.6 million for the 2HFY2022 ended Dec 31, 2022, 80% lower y-o-y.
This brings its FY2022 earnings to $162.0 million, 50% lower y-o-y.
Earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 0.68 cents and 4.22 cents respectively.
This is the first set of full-year earnings from the group since its spin-off listing from Yangzijiang Shipbuilding in April 2022.
Total income for the FY2022 fell by 20% y-o-y to $306.2 million as interest income and non-interest income fell.
Interest income fell by 10% y-o-y to $332.8 million as a result of lower average debt investments balance and the increase of non-performing loans in the 2HFY2022 amid the deteriorating China real estate market.
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At the same time, non-interest income fell into a loss of $26.5 million from non-interest income of $16.2 million in the year before mainly due to the 90.2% y-o-y plunge in dividend income of $7.7 million. The plunge was due to the lack of dividend declared by the group’s venture capital investments in China in 2HFY2022.
Profit before allowances for the FY2022 fell by 24% y-o-y to $277.0 million. During the 2HFY2022, the group’s allowances for credit and other losses increased by more than 400% to $135.9 million due to additional allowances made for non-performing debt investments and microfinance loans.
Profit after allowances fell by 59% y-o-y to $153.1 million.
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Other gains for the FY2022 stood at $36.6 million, where there were none in the FY2021.
As at Dec 31, 2022, the group had assets under management (AUM) of $4.1 billion.
Net asset value (NAV) per share stood at 104.95 cents as at Dec 31, 2022.
Cash and cash equivalents as at Dec 31, 2022 stood at $620.7 million.
The group has declared a first and final dividend of 1.8 cents, translating to a payout ratio of 43%.
“2022 was a challenging year for the group, as we focused on diversifying our portfolio across vintages, asset classes and geographies to maximise returns for shareholders over the long term. The group’s performance was also hit by the adverse impact of the Covid-19 pandemic on the Chinese economy. Nonetheless, we were able to remain profitable through the year,” says Ren Yuanlin, executive chairman of Yangzijiang Financial.
“As China reopens its borders, coupled with the government’s support measures for the domestic property sector, barring any unforeseen circumstances, we are cautiously optimistic of our prospects for 2023,” he adds.
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In its statement, the group says it will progressively reduce its exposure in China to 50% of its AUM as it diversifies its portfolio out of the country.
On the surge in family offices seen in Singapore, where there are 700 family offices in operation currently, the group says there is a “good opportunity” for its fund management and wealth management services to generate recurring revenue.
“Over the last year, we have made progress in setting up the infrastructure and team to invest our capital efficiently outside of China. The allocation of funds to assets outside of China will help to diversify our sources of income and to achieve sustainable risk-adjusted returns,” says Vincent Toe, the group’s CEO and CIO (Singapore).
“Building on our 50-year track record in shipbuilding, we are pursuing a strategy that optimises synergies between our overseas maritime funds and domestic financial leasing business. We are also leveraging our domestic financial platform and overseas funding advantages to establish investment entities and funds,” says Ren.
“Our traditional lending business will undergo a smooth transition and gradually contract as we expand our overseas portfolio through fund investments, strategic investments via Co-General Partner structures and direct investments in private equity and direct lending. All these strategies reflect our unwavering commitment to creating sustainable value for our shareholders,” he adds.
Shares in Yangzijiang Financial closed at 35 cents on Feb 28.
