Shareholders of Uni-Asia Group submitted questions in advance of the AGM, and the answers were provided by Uni-Asia on the SGX website. Here's the No.1 question: 

agm logoDate: 4 June 2020

via webcast

Q: Covid-19 has impacted all 3 business segments of the company. Pls provide an update on how the company intends to recover from this crisis.

michiotanamoto agm5.18Executive chairman Michio Tanamoto.A: While Covid-19 has impacted all the Group’s business segments, some segments are impacted to a lesser extent than others.

Being an investment and asset management company of diversified assets, the Group’s has more strategic options as well as varied income source, which help to cushion the impact of this pandemic.

Covid-19 has impacted the Group’s shipping segment mainly on vessels

(i) which charter hires are index-linked; or
(ii) which charters were renewed after Covid-19 outbreak which started in late January.

On the other hand, vessels which are on longer term fixed charter rate unaffected by spot rates are not impacted as much by the pandemic because the Group’s charterers are of good credit standing.

Around 90% of global trade is seaborne and shipping is still the main mode of trade transport.

Shipping market will eventually recover upon the passing of the pandemic, although the timing is an unknown factor.

Exit strategy

UniChallenge vessel

Due to the current depressed market, it is not wise to dispose of vessels affected by the pandemic.

"Instead, the Group is focusing on the upkeep and operational efficiency of all vessels during this period to maximise recurring income and cash flow, and upon market recovery, would consider suitable exits to generate capital returns

-- Uni-Asia Group

Separately, our structure finance arrangement deal team is working tirelessly to close existing deals as well as to bring in new deals.

In fact, the team had successfully completed some deals in early 2020.

Fees from these deals helped to support the Group’s bottom-line during this period.

For the Group’s Hong Kong property business, the Group is not rushing to launch presale for the projects under construction, although preparation has been made to take advantage of any possible window of opportunity.

Meanwhile, the progress and quality of the construction are being monitored closely.

Please refer to Question 4 above for more information. For the Group’s property business in Japan, as mentioned in the Corporate Update Announcement on 15 May 2020, while all property sectors in Japan are affected by Covid-19, the residential and logistics sectors are the most resilient while the hospitality sector is the worst-hit.

The Group has slowed down our sales activities for our residential projects in Japan while we wait for the market to normalise.

Meanwhile, the leasing market is not affected by Covid-19 and our newly completed projects this year were leased out in accordance with our business plan thus far.

Hotel Operations
The hotel industry in Japan has been hard hit by Covid-19, with bookings falling to an unprecedented low level following Japanese government’s state-of-emergency measures in early April.

Since then, the Japanese government announced several emergency measures to support the nation’s economy including the following:

- US$600 billion interest-free loan and US$120 billion preferred stock and subordinated loan to be provided by state-owned banks including Development Bank of Japan, Japan Finance Corporation, Japan Investment Corporation and Regional Economy Vitalization Corporation of Japan. Such loans are targeted at companies needing financing for survival during this period.

- US$3,000/employee Monthly Employment Support Scheme

- US$17 billion “Go To Promotion” to stimulate travel demand by subsidising half of domestic travel expenses

LimKaiChing3.18CFO Lim Kai Ching.The Group’s hotel operation has benefitted from the above measures by successfully securing long term loans from mostly state-owned banks in Japan since February 2020.

In addition, the Group has initiated negotiations with hotel owners and has gradually achieved reduction or suspension of lease payment through such negotiations.

These initiatives by the Group and measures from Japanese government have helped to support our hotel operation’s cashflow.

9 hotels which were temporarily closed have resumed operation in the first week of June soon after the cancellation of the state-of-emergency declaration on 25 May 2020.

The Group continues to focus on prudent cashflow management.

While preparing itself to ride on the upward travel demand recovery curve when the end of Covid-19 pandemic come to pass, the Group is simultaneously reviewing various options in respect of its hotel operation business with a view to align with its strategic priorities and to enhance shareholder value.

The other 4 shareholder questions are: 
• What is the Company’s view on shipping industry, whether it has recovered from bottom?

• The company has greatly reduced its borrowings in the past year. Is the current level of borrowings at a level the management would be satisfied with or would the management look to reduce borrowings even further this year?

• Gearing of the company is very high. Is the company at risk of breaching any financial covenants, especially if the asset value comes down in a recession?

• With reference to page 23 of the annual report, is it fair to say that there will not be any realised gains from the Hong Kong projects in 2020?

See the answers here. 


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