HONG KONG – China Aircraft Leasing Group Holdings Limited, the largest independent operating aircraft lessor in China, today announces the interim results of the Company and its subsidiaries for the six months ended 30 June 2016 (the “Reporting Period”).
For the six months ended 30 June
(in million Hong Kong dollars, unless otherwise stated) 2016 2015 Change
Revenue and other Income 1,026.6 635.7 +61.5%
Profit before income tax 335.2 157.8 +112.4%
Profit attributable to owners of the Company 240.0 116.7 +105.7%
EPS (Basic) (HK cents) 39.2 19.8 +98.0%
Interim dividend per share (HK cents) 14.0 4.0 +250.0%
The Group’s revenue and other income in the Reporting Period amounted to HK$1,026.6 million (six months ended 30 June 2015: HK$635.7 million), representing an increase of 61.5% year-on-year. Profit before income tax was up by 112.4% year-on-year to HK$335.2 million (1H 2015: HK$157.8 million). Profit attributable to owners of the Company surged by 105.7% corresponding year to HK$240.0 million (1H 2015: HK$116.7 million). Basic earnings per share increased by 98.0% corresponding year to HK$0.392 (1H 2015: HK$0.198).
The Board declared the payment of interim dividend of HK$0.14 per share in respect of the six months ended 30 June 2016 (1H 2015: HK$0.04), with an increase of 250%.
“We are delighted to deliver another strong profit performance in the first half of 2016. It is once again the outcome of our unique business model, backed by our continued globalisation efforts and financing innovation,” Mr. Chen Shuang, Chairman and Chief Executive Officer of CALC commented.
“CALC achieved a number of milestones during the Reporting Period. We have expanded our aircraft leasing business to new markets, allowing the Group to propel forward by capturing the growth momentum of the global aviation industry. Our advanced financing solutions and diversity of funding sources differentiate us from the peers and support our aggressive growth. Amongst the broad range of financing tools from the ingenious lease receivables realisation, our debut senior unsecured USD bonds and first syndicated loans to our first Japanese Operating Lease with Call Option (“JOLCO”) financing arrangement, we saw overwhelming responses from our banking partners and global investors, reflecting the market’s confidence in CALC’s unique business model and sustainable growth prospects.”
Expanded fleet size to 70 aircraft with globalised clients base
During the Reporting Period, CALC delivered seven aircraft to airline clients and thus grew its aircraft portfolio to 70 as at 30 June 2016. Among the seven aircraft delivery, two Airbus A320 aircraft were delivered to its first European client Pegasus Airlines. The first Airbus A320 to its first Southeast Asian Jetstar Pacific was also delivered in July 2016, taking CALC’s fleet size to 71 as of today and expecting to reach 81 aircraft by the year end. The Group has already signed and secured all lease agreements for the aircraft to be delivered in 2016.
In July 2016, the Group entered into a lease agreement with Japan’s ANA Group. This cooperation with the Asian top-tier airline marked another milestone in its international expansion, following its entry into Europe and South-East Asia in 2015.
Continued diversifying financing channels with new structures
Being China’s pioneer in aircraft financing, CALC took further steps in advancing its financing channels. The Group saw an increasing demand of USD-denominated aircraft finance products in the market, and took the opportunity to complete another rental realisation transaction after interim result period. Taken into consideration different risk appetites and return expectations of investors, the Group structured the latest transactions for aircraft into senior and junior tranches, a first-of-its-kind arrangement in China. This new structure again demonstrated CALC’s continued innovation on its aircraft capital securitisation products to cement its already-diversified financing channels, and more importantly, to keep its all-in financing costs at a lower level.
In addition, The Group launched its first USD bond US$300 million of a three-year term in May 2016, which was CALC’s one of the largest debt raising exercises and has allowed the Group to tap into the international bond market, establishing a significant channel for obtaining long-term financing from international investors. The Group then successfully launched another US$300 million five-year bonds with lower interest coupon in August 2016, the second time in less than four months, which further demonstrated investors’ high confidence in the Group business prospects and credit quality. It can enhance our working capital, improve liquidity, reduce costs and extend its debt maturity profile.
On top of the bond issuance, the Group made its debut in the syndicated loan market through a consortium of six financial institutions in May 2016. This syndicated loan facility of approximately US$195 million is used for financing aircraft pre-delivery payments and it will further support the Group’s long-term and sustainable growth while reducing its funding costs.
Another breakthrough was that the Group has closed its first JOLCO financing related to two new Airbus A320 delivered to Pegasus Airlines in June 2016. This innovative transaction is the first time a JOLCO has been structured to finance equity on a lessor for leases to an airline in Turkey.
Advancing globalization strategy through expanding client coverage and financing sources
The Group achieved considerable success in advancing its globalisation strategy on both the customer and financing fronts. Going forward, CALC will continue to develop overseas airlines while further enhance its relationships with top-tier Chinese airline groups. In particular, it intends to further expand its client coverage into previously untapped markets, as demonstrated by its recent entry to the Japanese market through the collaboration with ANA. To further increase the number of overseas lease, emerging markets would also be one of the key focuses of the Group due to their respective high growth potentials.
To support CALC’s international expansion, the Group is set to explore a wider range of innovative financing alternatives. At the beginning of the second half of the year, it has already further established multiple financing channels in the international capital market, such as ongoing arrangements of structured rental realisation transactions and the issuance of its second USD bonds. We are continuous to explore more innovative and diversified financing channels to enhance our capital efficiency and profit prospect.
Fleet expansion to 173 aircraft by 2022 – in scale and in variety
In expectation of a fast growing leasing market, CALC has been consistently expanding its aircraft fleet to satisfy market needs. We are currently on schedule to reach 173 aircraft fleet by 2022 and the Group would further continue its fleet expansion plan in number and in variety, such as the latest MOU with COMAC over an order of 60 ARJ21-700 series aircraft signed in July 2016. This will upon delivery further diversify CALC’s fleet portfolio, allowing it to provide different leasing solutions to airlines with more flexibility, thus further raising its ability in capturing the huge potential in growing regional aviation markets. Meanwhile, the Group will maintain and strengthen its good relationship with different aircraft manufacturers, with the aim of providing aircraft leasing services with quick delivery schedules.
Strengthen the position as aircraft full-life solutions provider through China Aircraft Disassembly Centre (“CADC”)
With an aim of extending the value-chain and supporting the long-term development of China’s aviation industry, the Group has started to build an aircraft disassembly centre at Harbin Taiping Airport in 2015. The Group expects that, after the shareholding restructure of the CADC project in the second half of 2016, CALC would be able to leverage on its partners’ respective strengths and expertise in accelerating the commencement of the operation, eventually completing the final jigsaw of its value chain. It is expected that the construction of the CADC project would complete in 2018.
Mr. Chen added, “CALC has been committed to becoming a full-value chain aircraft solutions provider with a worldwide presence. We are excited that the CADC project would soon be in operation, as it would complete our full value-chain services from aircraft acquisition and leasing, to fleet management, disassembly and parts distribution. Together with our globalisation strategy and fleet expansion plan, CALC is well-equipped to capitalise the favourable conditions of the aircraft leasing market. We will keep on delivering long-term value to our shareholders while retaining our leading position as one of the largest independent aircraft lessors in China.”