With investors focused on its asset quality, cost control and near-term growth potential, Chailease Holding Co (中租控股), Taiwan’s top leasing services provider, last week reported a double-digit percentage increase in profit for last month and last year as a whole.
The results were released at a time when investors are also worried about the possible influence of a slowing Chinese economy and the US-China trade dispute on the company’s Chinese customers, which could pose a risk to the company’s operations in China.
Investors have been cautious ahead of crucial trade talks between China and the US this week.
Washington is scheduled to increase tariffs on US$200 billion of Chinese goods from 10 percent to 25 percent on March 2 if the two sides do not reach a deal by March 1.
Chailease shares have risen 15.87 percent in Taipei trading over the past month, more than the broader market’s 3.67 percent increase over the period. On Friday, the stock closed up 2.28 percent at NT$112 on the Taiwan Stock Exchange.
“Only 5 percent of Chailese customers in China might be affected by the US-China trade spat and so far they have maintained a healthy credit profile,” a Chailease communication official said last week.
In a regulatory filing issued on Thursday, Chailease said that its net income attributable to the parent company last month increased 23.92 percent annually to NT$1.1 billion (US$35.62 million), making for earnings per share of NT$0.87.
Net income totaled NT$13.37 billion last year, up 38.48 percent from NT$9.66 billion in 2017, with earnings per share rising from NT$8.29 to NT$10.58, the filing showed.
Consolidated revenue rose 14.55 percent to NT$4.63 billion last month, while revenue last year expanded 21.75 percent to NT$50.47 billion.
Company data showed that revenue and profit generated in China accounted for 46.7 percent and 45.41 percent of the company’s total revenue and profit respectively as of the end of September last year, with revenue and profit in Taiwan making up 43.3 percent and 50.91 percent respectively and the remainder coming from ASEAN markets.
“Taiwan serves as the bread-and-butter market for Chailease, but in recent years China has been the main growth market,” DBS Vickers (Hong Kong) Ltd analyst Ken Shih (施耕宇) said in a note on Tuesday last week.
Accelerating demand for financing from China’s small and medium-sized enterprises (SME), and an improving asset quality cycle since 2016 have led to an increasing profit contribution from the company’s China operations, Shih said.
Despite increasing macroeconomic uncertainties in China, Chailease’s asset quality will remain benign and the company could mitigate market risks thanks to its good track record in SME financing and credit control, Shih said.
DBS forecast that the company’s earnings per share would reach NT$11.37 this year and NT$12.53 next year.
Additional reporting by Crystal Hsu
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