Yangzijiang Financial sinks into red in H2, posts FY2025 loss on China property provisions

[SINGAPORE] Yangzijiang Financial swung into the red in the second half of FY2025 with a net loss of S$142.9 million, from a net profit of S$197.3 million in the same period a year earlier.The decline was driven largely by credit loss allowances of S$304 million, on the back of changes in market conditions and recovery expectations within China’s property and credit markets. Total income for H2 FY2025 was down 16 per cent at S$52.1 million, primarily pulled down by a drop in interest income – the group’s primary source of revenue derived from debt investments, including debt securities and microfinancing loans – amid a lower average balance of debt investments in China.No dividend was declared for FY2025, compared with a final dividend of S$0.0345 in the previous year.For the full-year, Yangzijiang Financial had a loss of S$5.2 million, reversing from a profit of S$304.6 million in FY2024. Profit before allowances remained positive at S$92.2 million, reflecting continued income contributions from performing assets and associated investments.Meanwhile, total income fell 19 per cent to S$103.7 million.Future plansIn a statement on Saturday (Feb 28), the group said that its immediate focus is on portfolio optimisation, accelerating cash recovering and resolving non-performing exposures.As part of its rebalancing strategy, it plans to move towards a long-term allocation framework comprising about 40 per cent income-generating debt investments, 40 per cent equity investments (including private equity and listed equities), and 20 per cent cash and cash equivalents to preserve liquidity and flexibility. Within the 40 per cent equity allocation, about 20 per cent of assets under management will be deployed into private equity, targeting “fundamentally strong businesses with restructuring or value-enhancement potential”, while the remaining portion will be deployed to selected listed public equities across China and South-east Asia.For the first half of 2026, the group plans to progressively deploy up to one billion yuan (S$184.4 million) into selected high-yield (more than 4.5 per cent) listed equities and value-accretive investment opportunities.Liu Hua, executive chairman of Yangzijiang Financial, noted: “The recognition of FY2025 allowances reflects prevailing market conditions and aligns our portfolio valuations on a more conservative basis.“With a strengthened balance sheet and zero external borrowings, we are focused on disciplined capital redeployment and building a more resilient and diversified earnings base over time.”Ahead of the results, Yangzijiang Financial climbed 5.1 per cent, or S$0.015, to end at S$0.31 on Friday. It had earlier issued a profit warning for its FY2025 results, which saw its shares falling to a two-year low on Thursday amid heavy trading.