Chailease Holding Co Ltd (中租控股), the nation’s top leasing services provider, is cautiously optimistic about this year after posting record earnings for last year and said the COVID-19 pandemic would have a limited impact on its business in China.
The company has lowered its loan growth target to between 5 and 10 percent this year, down from a previous target of 10 to 15 percent due to the current macroeconomic situation, it said in an online conference call on Tuesday last week.
To address the asset quality issue in China, it has also increased its general provision ratio for operations there to 1.7 percent, an increase of between 1 and 1.2 percent from last year.
It has 49 branches in China, including one in Wuhan, the center of the outbreak in China.
Operations in Wuhan last year accounted for about 2 percent of its business volume in the country and less than 1 percent of total business volume.
Chailease said it has handled its operations well during the outbreak through payment postponement and loan restructuring for some portfolios in China — accounting for 3 percent of its Chinese loan book — and expects its overall business to resume growing once the pandemic subsides.
It reported net income last year of NT$15.47 billion (US$511.64 million), a 15.7 percent increase from NT$13.37 billion in 2018, with earnings per share of NT$11.65 and annual return on equity of 24 percent.
It attributed the strong performance to China loan growth, lower funding costs and solid asset quality.
Revenue last year expanded 17.16 percent to NT$59.13 billion, while the delinquency ratio was 2.7 percent for Taiwan operations, improving from 2.8 percent a year earlier, and the ratio in China also improved from 2.1 percent to 1.9 percent.
Taiwan, China and ASEAN generated 51 percent, 41 percent and 5 percent of profits respectively last year, with its solar power business making up the rest, company data showed.
To maintain a stable asset-equity ratio — a leverage gauge that indicates the portion of its assets that are financed by shareholders — and its long-term business development, Chailease plans to raise new capital by issuing up to 150 million preferred shares in Taiwan during the second half of the year, it said.
“We continue to hold a long-term positive view, and position Chailease as the best play within China’s leasing sector,” DBS Bank (Hong Kong) Ltd analysts Ken Shih (施耕宇) and Sam Lu said in a note on Wednesday.
However, Yuanta Securities Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said in a separate note issued on Tuesday that she remained neutral on Chailease.
“The COVID-19 outbreak will likely impact the company’s clients, especially in China,” she said.
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