Real estate loans accounted for some 32% of YZJFH’s debt portfolio as at end-1HFY2022 in June. Gross non-performing loan (NPL) ratio spiked to 30.8% as at end-3QFY2022 in September, more than double the 14.4% average over FY2018-2021.
Yangzijiang Financial Holdings (YZJFH) is “deeply undervalued” but its business could hit a trough in the current 2HFY2022 and heading into 1HFY2023, given its loan exposure to China’s real estate which has added to the company’s non-performing loans, say CGS-CIMB Research analysts Izabella Tan and Lim Siew Khee.
In a Dec 5 note, Tan and Lim maintained their “add” call on YZJFH but with a lower target price of 64 cents from 74 cents. The new target price represents an 85.5% upside against a traded price of 34.5 cents.
