With investors focused on its near-term growth potential, asset quality and funding, Chailease Holding Co (中租控股), the nation’s top leasing services provider, yesterday reported a double-digit percentage increase in profit for both last month and the first nine months.
The results were also released at a time when investors are worried about a possible cash crunch in China, which would pose risks to the company’s Chinese operations.
Concerns about a cash crunch come after the seven-day repurchase rate increased by 157 basis points this week to close at 5.06 percent in Shanghai yesterday, after China’s central bank refrained from injecting funds through open-market operations this week.
Shares of Chailease fell 3.12 percent to close at NT$71.5 yesterday. At one point, the stock declined as much as 4.74 percent, but the losses were pared before the end of the session as investors welcomed the firm’s latest financial results.
In a stock exchange filing yesterday, Chailease said its net income last month increased 14.6 percent to NT$494.4 million (US$16.78 million), or earnings per share (EPS) of NT$0.5, from NT$431.3 million in August. On an annual basis, last month’s net income rose 3.7 percent.
During the July-to-September quarter, net income totaled NT$1.41 billion, or NT$1.4 per share, and the first nine months’ figure was NT$4.28 billion, or NT$4.3 per share, up 53 percent from a year earlier, the filing showed.
The company’s revenue, released in a separate filing on Oct. 9, rose 2 percent month-on-month and 28 percent year-on-year to 2.51 billion last month, with cumulative revenue for the first nine months expanding 37.75 percent year-on-year to NT$20.92 billion.
Chailease said that profit increased significantly in its Chinese operations last month from August, when its equipment leasing business was adversely affected by China’s new value-added tax rules introduced in that month. With more new outlets to be set up in China and signs of increased capital spending by Chinese companies, Chailease expects growth momentum to continue in China this quarter.
The company’s data showed that revenue generated in China accounted for 50 percent of the company’s total revenue in the first half of the year, with Taiwan revenue making up 38 percent and 12 percent coming from other markets such as Thailand, Vietnam and the US.
JPMorgan Securities Taiwan Ltd forecast the company’s leasing portfolio could see growth of 25 percent in Taiwan this year and 30 percent in Thailand, which will help offset the slowdown in China on the back of weakening economic growth there.
The company’s overall leasing business is forecast to grow 20 percent this year from last year, and will see business scope expand to the service industry from current manufacturing-focused customer base, JPMorgan analyst Jemmy Huang (黃聖翔) said in a note yesterday.
New business from Canadian aircraft maker Bombardier and expansion plans in Thailand will also boost the company’s prospects next year, he added.
In June, Chailease inked a financing deal with a foreign client to purchase a corporate jet from Bombardier, as the company attempts to broaden its aircraft leasing business in Southeast Asia and increase its revenue.
JPMorgan expects the company to post earnings per share of NT$5.72 this year and NT$6.9 next year, compared with NT$4.57 last year.
Additional reporting by Bloomberg and Crystal Hsu