YHGG - Land use rights
It is true that land use rights are considered intangible from accounting perspective. But in fact they are tangible assets, more so than the other tangible assets such as plants and equipments.
1) Due to the Chinese law, nobody except governments own the land. The holders of land use rights are therefore considered the owners of the land for all practical intent and purposes.
2) In China, the land use rights are treated as tangible property that can be auctioned, purchased, and transferred, and are frequently used as collateral for bank loans. Banks actually prefer land use rights than other collaterals since "land does not have legs and can not walk away".
3) Since land is very scarce resource, there will be no shortage of buyers who are willing to pay premium for the land use rights.
Should YHGG go bankrupt today, I can bet you that the company would have no problem finding buyers for its land use rights, often with a premium over cost. I can not say the same for tangible assets such as equipments and plants.
YHGG's land use rights = 958M, its market cap = 327M. The auction of land use rights alone would pay 3x of current PPS.
PS. China adopts dual land tenure system under which land ownership is independent of land use rights. ALL of Chinese land are either owned by the state ("State Land") or by rural collective economic organization ("Collective Land"). The land use rights are auctioned off at high premiums every year.
AI
