Courage Investment 1H21 results show Evergrande debt at 4 percent of assets

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Courage Investment reported Tuesday its debt portfolio holds China Evergrande Group debt, acquired for US$3.4 million, making up 4 percent of the group’s total assets and around 25.2 percent of the fair value of the debt portfolio.

The market or fair value of the Evergrande securities at end-June was US$2.49 million, Courage Investment said in a filing to SGX for its first half results.

Concerns over Evergrande’s potential debt default has caused market ructions globally.

Troubled Chinese property group China Evergrande has around US$305 billion in liabilities and last week missed paying US$83.5 million in interest to offshore bondholders, according to a Reuters report Tuesday. Another US$47.5 million coupon payment is due Wednesday, the report said.

Reuters reported, citing people with knowledge of the matter, that Beijing has been prodding state-owned and state-backed enterprises to purchase some of Evergrande’s assets.

For the first half, Courage Investment said the investment holding business posted revenue of US$392,000, up slightly from US$390,000 in the year-ago period, with the revenue coming from interest income from corporate bonds.

Total first half revenue for the group slipped to US$4.12 million from US$4.36 million in the year-ago period, but the company swung to a net profit of US$703,000 from a year-ago loss of US$1.31 million, Courage Investment reported.

The turnaround in profit was mainly due to a narrower decrease in fair value of an investment property of US$39,000, compared with a US$1.14 million fall in the year-ago period, and the absence of a year-earlier decrease in the fair value of financial assets, the company said.

The company was generally upbeat about the results.

“Generally speaking, the market conditions faced by the group have improved considerably during the review period following the launch of vaccination campaigns globally to combat Covid-19, amid the emergence of the coronavirus variants and the new wave of outbreaks in some countries,” Courage Investment said.

Courage Investment’s businesses are marine transportation, property holding and investment, investment holding and merchandise trading.

The investment holding segment posted first half revenue of US$392,000, rising slightly from US$390,000 in the year-earlier half-year; the segment reported a profit of US$389,000, compared with a year-ago loss of US$350,000.

Marine transportation results

The marine transportation segment reported first half revenue of US$3.64 million, up from US$3.54 million in the year-ago period, with profit of US$1.15 million, up 4 percent from US$1.11 million a year earlier.

“The increases in revenue and profit of the operation were mainly due to the moderate increase in charter rates of the group’s vessels during the period, mainly resulting from the improved market conditions and the increasing demand for marine transportation services, which in turn owing to the increasing demand for commodities in general to meet the expectations of a global economic recovery,” the company said.

The market conditions in marine transportation remain volatile, it said, but added, it was “prudently optimistic” about the segment’s prospects in the medium-to-long term.

The property holding and investment segment posted first half revenue of US$91,000, down from US$110,000 in the year-ago period. The segment’s investment property is an office at Shun Tak Centre in Hong Kong.

Merchandise trading posts no revenue

The merchandise trading segment reported no revenue for the first half, compared with US$323,000 in the year-ago period.

“During half-year 2021, mainly due to the continuation of the Covid-19 pandemic and the trade disputes between China and the U.S., there was no revenue,” Courage Investment said, noting the segment focuses on trading electronic components. “The business is in temporary halt and will resume when market conditions improve.”

No dividend was declared for the first half, unchanged on-year.