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YANGZIJIANG Financial : YF8 0% on Sunday (May 26) said that its entry into the maritime sector will not create a conflict of interest with its sister company, Yangzijiang Shipbuilding : BS6 0% (YSL).
The company was addressing shareholder queries in a bourse filing, ahead of an extraordinary general meeting (EGM) on May 31. It is seeking shareholders’ approval to diversify its core business into the maritime sector, loan services, and imports and exports.
A shareholder had asked if the diversification is a conflict of interest, given that YSL is also in the maritime business and both companies have the same controlling shareholders.
In the filing, Yangzijiang Financial said that it “has no intention of competing in the shipbuilding segment”, but will focus mainly on services such as finance leasing, ship agency, ship broking, and the provision of secured loans to maritime players.
In contrast, YSL’s main operating model remains in building commercial vessels such as containerships, oil tankers, bulk carriers, LNG vessels and other gas carriers. While it does operate a supplementary shipping business, this is relatively small compared to its shipbuilding operations.
YSL is also engaged in the import and export business, but this is directly related to its own shipyards. Yangzijiang Financial, on the other hand, offers these services to non-YSL clients, the company said.
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“Despite having the same controlling shareholders, YSL and Yangzijiang Financial are separate entities with their own boards and management teams, ensuring independent decision-making,” it added.
That said, it does not rule out entering into any deals with YSL if it is in its best interests.
Another shareholder questioned if the two listed Yangzijiang companies will merge back into one. Yangzijiang Financial confirmed that there are currently no plans to merge with YSL, or to privatise the company.
It reiterated that keeping the two units separate allows the shipbuilder to focus on its core operations while enabling Yangzijiang Financial to concentrate on fund management, specifically secured loan origination.
“Management also took into consideration that the market prefers both of its core businesses – shipbuilding and fund management, respectively – to be separated, operating as ‘clean entities’ as there are no clear synergies from having both shipbuilding and fund management operating out of YSL,” it added.
Separately, Yangzijiang Financial also addressed concerns about the impact of headwinds in China’s property market. It noted that China has measures aimed at stabilising the real estate market, such as liquidity provisions through policy loans and special securities.
“The group has already made the necessary provisions for potential impact on our assets, based on our management team’s conservative assessment. Where recoverable amounts are received in the future, it could result in an upside to earnings,” the company said.
Shares of Yangzijiang Financial ended Friday at S$0.32, down S$0.005 or 1.5 per cent.
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