Yangtze China Investment NAV down in FY as economic woes bite
In its full-year results statement, Yangtze China Investment
said it has not been immune to the current adverse conditions in the
global economy, and it has adopted a cash-holding strategy while it
“cautiously screens” suitable investment opportunities.
As at
the 31 March 2010, the company’s NAV (net asset value) had slipped to
US$23.8m (FY09: US$24.5m), with NAV per share declined by 3.1% to
US$0.94 (FY09: US$0.97), and it had cash and cash equivalents of US$6m.
Yangtze
China Investment is a closed-end investment company, which was
established in 2008 to make minority equity and equity-related
investments in a portfolio of small and medium-sized businesses within,
or associated with, the consumer sector in China.
Currently the portfolio includes a beauty spa franchise based in
Beijing; a cash processing technology manufacturing company (cash
registers, handheld POS systems, ect); A 3-D display technology business
involved in the production of 3-D movies and TV; and an interest in a
TV shopping production company.
According to Yangtze China, its
investment adviser has examined a number of projects across a broad
range of sectors - including the media, water treatment, food and
beverages, electronics, bio-medical, apparels and skincare - and most of
the projects have been classified for future follow-up.
Whilst
acknowledging the NAV in FY09, the company’s chairman Wilfred Wong
highlighted that a “strong rebound in China's economy and the return of
liquidity to the market have prompted more investors to look to China
for high-growth investment opportunities.”
“Our current cash
position of US$6.0 million places the company in an excellent position
to invest in good-quality assets at attractive entry valuations as and
when suitable opportunities arise.”
In reference to the wider
Chinese economy, the company noted that the Chinese government remains
cautious over its outlook in 2010. Yangtze China highlighted that the US
and Europe - which have been most affected by the economic turmoil -
account for over half of China's exports.
However, the
investment company told investors that it “remains confident that
China's underlying economic strength and the PRC Central People
Government's macroeconomic stimulus will continue to further position
China as one of the world's major economies.”
The US$586bn
Chinese stimulus package was established in November 2008, and according
to Yangtze China, economic growth has been maintained as a result, with
8.7% GDP growth in 2009, driven by retail sales and fixed asset
investment.
“The Chinese government's stimulus package in
November 2008 reinforces our investment strategy as it aims to support
China's GDP growth and to foster the long-term development of its
domestic sector. Given China's strong underlying economy and strong
domestic growth, the board of directors is confident that the company is
well positioned to capitalise on these opportunities."
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