IN SHANGHAI over three days last week (Wed-Friday), SGX-listed companies such as Yangzijiang Shipbuilding, GMG Global, Changjiang Fertilizer and C&G Industrial were busy presenting their stories to US fund managers and others.
The 1st Halter Financial Summit was organized American-style and attended by more than 50 US funds among the 300 institutional investors who turned up to meet some of the 100-plus listed companies taking part.
In a big hall with 45 tables, senior management of each company took up a table. The fund managers had half an hour with each company.
The Singapore-listed companies – included those named above, which were brought to the summit by Financial PR and Aries Consulting, its sister company in Hong Kong - attracted much interest from the Chinese funds.
Among them were China Best Group, Shanghai Smallville Asset Management and Astin Asia Limited. Global institutional funds included GE Global Private Equity, Tiger Fund, Infinity Equity, SMC China Fund, Pinpoint Investments and Citic Prudential.
We found out from several local funds that they had set up Cayman Island companies so they could invest in overseas listed Chinese companies. Take, for instance, China Best Group, which is among the top 20 shareholders in China Sunsine Chemical and another 2 S-chip companies.
Many fund managers expressed disbelief at the low valuations of Singapore-listed companies.
The SG-listed companies had to explain the S-chips corporate governance issues that have spooked Singapore investors.
Other matters discussed included rising labour wages brought about by the increase in minimum wage regulations implemented in April.
* Until recently was known as Epure International Stock price Market
cap (S$m)2009
PE ratioDividend yield (%) YANGZIJIANG
$1.24 4,530 9.6 2.8 SOUND GLOBAL* $1.01 1,303 22.6 - CHANGJIANG FERTILISER 28 c 101 5.4 - C&G INDUSTRIAL 24.5 c 238 19.9 0.4 GMG GLOBAL 22.5 c 864 150 - CHINA SUNSINE 24.5 c 121 6.5 8.2
The funds were also interested to find out the impact of the extreme drought in Yunnan on the food and agricultural companies as well as new renewable energy policies by the PRC government and how it would change the landscape for renewable energy players like C&G Industrial.
Johnny Jia, a fund manager with China Watch Fund, told me that he was glad that the attendee companies came from a wide spectrum of industries and different stock markets.
He feels that S-chips are not necessarily discriminated in Singapore. He listed examples such as Yangzijiang Shipbuilding and Sound Global (fka Epure International) in which his fund have vested interests.
He said these companies' management and business are good and these have been reflected in their valuations.
As for the others, he felt that there are some fundamental weaknesses in these companies which prevent them from achieving a fair market value. These weaknesses include being too small in scale to compete as well as lack of communications with shareholders.
