Chailease Holding Co Ltd (中租控股) is on course to reach a 10 percent growth target for its loan portfolio this year after achieving the lower end of its annual loan growth guidance of between 5 and 10 percent in the first half of the year, it said.
Despite annual improvement in asset quality being in sight for the January-to-June period, Chailease expects better asset quality in the second half of the year, as the COVID-19 pandemic affected the first half, the nation’s top leasing and finance services provider said in an online conference call on Wednesday last week.
Chailease’s business focuses on asset-based financing to small and medium-sized enterprises (SMEs) and retail customers in Taiwan, China and the ASEAN.
The company said it has only experienced minor effects from the pandemic, as the disease has been effectively contained in Taiwan and China.
While ASEAN nations were affected by the pandemic at a later stage, the company’s businesses in Vietnam and Malaysia are gradually recovering after strict measures were applied, it added.
Chailease’s net profit in the first half of the year grew 4 percent to NT$7.89 billion (US$267.1 million), from NT$7.62 billion in the same period last year, with earnings per share of NT$5.71.
The company attributed the results to good earnings growth momentum from Taiwan, where earnings rose 21 percent year-on-year to NT$4.44 billion, thanks to better pandemic control and good demand for auto and SME loans.
Taiwan generated 51 percent of Chailease’s total profit in the first half, compared with China’s 45 percent and ASEAN’s 5 percent, with its solar power business making up the rest, company data showed.
Consolidated revenue in the six-month period was NT$28.24 billion, up 2.8 percent from NT$27.47 billion a year earlier, while its consolidated delinquency ratio was 2.95 percent, compared with 2.78 percent a year earlier, and its ratio of loan-loss allowance to total loans fell from 2.72 percent to 2.52 percent over the same period.
The company said its asset quality in China has seen sequential improvement, with its customers’ loan repayment ratio substantially improving from 94.8 percent in January to 99 percent in June.
China’s delinquency ratio was 2.39 percent as of June 30, compared with 2.42 percent as of March 31, but up from 1.96 percent a year earlier.
To meet the government’s green energy development policy, Chailease has invested more than NT$30 billion in solar power plants, it said, adding that it plans to continue expanding its solar investments in the next five years, ranging from rooftop solar systems to ground-mounted solar farms.
SinoPac Securities Investment Service Corp (永豐投顧) maintains a positive view on Chailease, saying that the company’s business momentum in the second half should be better than in the first.
“Positive earnings drivers include peak seasonality in the second half of this year, reduced provision pressure as the easing pandemic conditions have helped stabilize the delinquency ratio in China, and the company’s rising gross loans and receivables amounts, which set the stage for stronger earnings momentum once the pandemic wanes,” SinoPac said in a note on Friday.
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