Comments on the annual report of Bohai Financial Holding (000415): the leading position of leasing is further consolidated and the scale effect is constantly improved
Introduction to this report:
The improvement of scale effect and the full release of C2 performance are expected to drive the company's performance in 18 years to achieve faster than expected growth, and the subsequent reduction of the company's financial leverage is expected to improve the company's valuation.
Key investment points:
Maintain the "overweight" rating, maintain the target price of 9.19 yuan, corresponding to 18P/B1.6X, 18P/E16X. In 2017, the company's operating income/net profit attributable to the parent company was 35.93/2630 billion yuan,+48.1%/+15.5% year-on-year, ROE 8.4%,+58bps year-on-year, in line with our expectations, the company plans to allocate 0.6 yuan per 10. The consolidated C2 statement of aircraft leasing assets in 2017 and the endogenous growth of leasing business drove the company's performance growth in 2017; The improvement of scale effect and the release of C2 performance are expected to drive the continuous growth of the company's subsequent performance. Considering the endogenous growth rate of leasing business, the EPS in 2018-20 is adjusted to 0.58/0.69/0.82 yuan (0.57/0.77 yuan in 18-19 years before the adjustment).
The leading position of leasing was further consolidated, and the scale effect gradually emerged. 1) In 2017, the company completed the acquisition of 100% equity of C2 and GECAS asset package, integrated aircraft leasing business with Avolon platform, and the effect of economies of scale became increasingly apparent; At the end of the year, the company owned, managed and ordered a total of 943 aircraft, with the market value of its fleet ranking third in the world. The expansion of its fleet strengthened the company's bargaining power and effectively reduced aircraft procurement costs. 2) At the end of the year, the company owned and managed about 3.55 million CEUs of containers, ranking second in the world. The revenue and gross profit margin of the company's container sector increased slightly year on year. 3) The domestic leasing business is developing well, and the operating revenue in mainland China in 2017 was+23% year on year.
C2 performance in 2018 is fully reflected, and the decline of financial leverage is expected to improve valuation. 1) C2 transferred its ownership in April 2017, contributing a total of 1.09 billion yuan to the company's performance in only three quarters. At the same time, C2's merger and acquisition fees and financial expenses arising from early financing totaled 570 million yuan. The release of C2's annual performance and the reduction of expenses will drive the company's performance in 18 years to increase significantly year on year. 2) The annual report disclosed that the company plans to effectively reduce the overall asset liability level by means of war and asset integration. In September 2017, the shareholders' meeting approved the company's preferred share issuance plan of no more than 8 billion yuan. The reduction of financial leverage is expected to improve the company's valuation level.
Catalyst: measures such as the issuance of preferred shares promote the reduction of the company's financial leverage; Extensive financial layout was promoted.
Risk tip: business integration is not as expected.
