Strong confidence in Bohai Capital's promising future and true investment value, the SMT of HNA shall Increase its Holdings
On December 13th 2017, Bohai Capital (000415.SZ) released three announcements that all the directors of the HNA Group, including Mr. Chen Feng and Mr. Wang Jian, and the executive team of HNA Capital, the controlling shareholder of Bohai Capital, and Bohai itself shall increase its holdings of Bohai Capital by 86.7 million RMB through secondary market in the next three months.
According to Bohai’s announcements, the decision is based on the strong belief of the true investment value and promising future of the company. The SMT of HNA and Bohai Capital believe the action will promote the sustainable, stable and healthy development of the company.
This is the first time that the HNA’s senior management team proposed to directly increase its shareholding of HNA’s listed company. “This action highlighted the importance of Bohai to HNA” an analyst said.
Since Nov 13th, Bohai’s share price has experienced a lasting drop to the lowest point of 5.69 per share. As the world’s 2rd largest container leasing company and world’s 3rd aircrafts leasing company, the total market value of Bohai Capital is 3.52 billion RMB with the PB of 1.13 and PE of 13, both of which are significantly lower than average industry standards in China’s A-share market. The SMT of HNA and Bohai Capital believe that the company is undervalued.
Bohai Capital is a leading global leasing company listed on the Shenzhen Stock Exchange (SLE: 000415) and is the largest leasing company in China’s A-share market. Bohai Capital owns a portfolio of market leading transportation and infrastructure asset leasing companies principally focused on aircraft and container leasing.
Along with the recovery of the aviation industry since 2008, the aircraft leasing industry also experienced a strong increase. Based on the forecast of Boeing, in the following 20 years, 39,620 new aircrafts will pour into the market, which will create enormous opportunities for the aircraft leasing industry. According to the prediction of the IATA, the aircraft owned by the leasing company will make up 50% of the global aircraft in service. The high proportion of operating leasing indicates the trend that the air transportation companies prefer to lease, instead of purchasing, aircraft to relieve the pressure on capital.
As the Baltic Dry Index hit a record high over the last four years, the demand from the container business has grown significantly. The price of the 20’’ dry container has risen from $1,250 /TEU to $2,250/TEU. There are signs that the container leasing business is starting to recover. According to the public disclosure information of Bohai Capital, its container utilisation rate has risen to above 96% at the end of third quarter 2017. As of September 30, 2017, the total assets of Bohai Capital reached RMB 31.08 billion, representing an increase of 43.5% over the end of last year. Operating Income of RMB 2.815 billion, increased by 61.4% compared to the same period last year. Net Profit attributable to shareholders was RMB 1.873 billion, an increase of 30% compared with the same period last year. Net asset value per share was 5.05 RMB.
Over the last three years, the compound growth rate of total revenues of Bohai Capital reached 88% and the net income attributed to the shareholder hit 58%.