Full Value-chain Aircraft Solution Provider

Transcription

1 Full Value-chain Aircraft Solution Provider (Stock code: HK) Corporate Presentation to Investor (Nov 2015)

2 Business Overview

3 Shareholding Structure Number of issued shares (as at 15 Sep 2015): 605,890,800 shares and related party Public shareholders CE Aerospace 35.6% 30.8% 33.6% CEL A leading financial services enterprise listed in HK (stock code: 165.HK) A Chinese central government-owned enterprise A Fortune 500 company FPAM An asset manager of aviation valuechain Covering aircraft leasing, airport investment and management, aircraft disassembly, creative financing A shareholder of Toulouse -Blagnac Airport Long term investors includes China Aerospace Science & Technology Corporate (CASC) CCB International Other fund investors 3

4 CALC at Glance aircraft fleet aircraft on order with Airbus aircraft in 2022 (base case) average age average remaining lease term total assets aircraft lessor listed in Asia staffs with offices worldwide aircraft disassembly facilities in China 4

5 One-stop Aircraft Solutions Provider Aircraft manufacturers Secondary market Purchase aircraft Provide aircraft 1 Aircraft lease income (recurring) Provide aircraft leasing and other value-added services High quality airline customers Air Berlin, Air Asia, AP Fleet, etc. Partners Insurance companies Banks Realise finance lease receivables Pay cash Acquire ageing and retiring aircraft Financial institutions China Development Bank The Export-Import Bank of China Bank of China Bank of Communications Bank of Taiwan China Construction Bank China Everbright z Bank HSBC ICBC Asia Industrial and Commercial Bank of China Toronto-Dominion Bank UK Export Finance KEB Hana KDB Provide financing services Financing 2 3 Income from old aircraft sale and leaseback Income from the sale of disassembled aircraft parts Recycle disassembled old aircraft engines and parts Airlines / cargo companies Aircraft parts / materials recyclers Existing business/revenue Future business/revenue Income flow 5

6 Strategies

7 Our Strategies 1 Capture the full value-chain of aircraft life cycle A one-stop service provider covering new aircraft purchase, structured finance, lease negotiations, on lease asset management, fleet replacement package deal, sale-and-leaseback of old aircraft and aircraft disassembly. Provide solutions for old aircraft First Chinese aircraft lessor to offer used aircraft disposal Add high value to airlines when renewing their fleets Not affiliated to any OEM, bank or airline Able to deliver flexible solutions for clients Proactive aircraft asset management The first wholly foreign-owned aircraft leasing company in the Tianjin DFTP Able to offer diversified solutions to airline customers with its complementary onshore and offshore dual platforms Old Aircraft Solutions Aviation Value-Chain Purchase from OEM & secondary market Demand of Airline Customers Domestic &Overseas Dualplatform Flexible Leasing Structures Diversified Financing Channels Order directly from OEM Purchase used aircraft from international markets Customized lease structures for new and old aircraft Lowering the overall costs of the lease Use multiple financing channels including banks, ECAs, securitizations and capital markets Long-term leases allow CALC to acquire long-term loans from financial institutions 7

8 Our Strategies 2 Prior to 2014, Greater China as home market Globalisation From 2014 onward, step in Asian, European and other markets In 2020, to build the overseas and domestic airlines as our lessee and make proportion of our fleet by 50 to 50 in long run No additional equity injection needed 8

9 Strategy Supporting Project Full Value-chain of Aircraft Life Cycle Objective: To explore domestic and overseas markets and become one of the largest disassembly plant CADC business scope: China Aircraft Disassembly Center (CADC) 1. Aircraft dismantling services 2. Disassembled parts sales to commercial airlines, cargo airlines, maintenance, repair and operations(mro), Aircraft on ground(aog) services 3. Accident aircraft emerging management 4. Customise aircraft frame to fit customer demand 5. Aero metals and non-metal materials recycle services Location: This facility is located on the Southern side of Harbin Taiping International Airport. It covers an area of about 300,000 square meter. CADC is a significant move for CALC in terms of Opening up new revenue stream Enhancing relationships with airline customers Optimising the residual value of aged aircraft Complete its full value chain services as aircraft solutions provider Recent progresses: Strategic Cooperation Agreement signed with Eastern Airlines Technic Co, Ltd. for aircraft/engine maintenance services and technical advisory services Land acquired and design of the site construction finished with third party consultant under review Strong local support and incentives from the government Network build on sourcing old aircraft and distribution of dismantled parts Strong interest comes from PRC banks in financing CADC project, which will not require a large CAPEX from CALC 9

10 Strategy Supporting Project Full Value-chain of Aircraft Life Cycle (cont.) CADC Three Phases in Ten Years strategies First Phase Expected to reach an annual dismantling capacity of 20 aircraft by Second Phase Expected to reach an annual dismantling capacity of 50 aircraft by Third Phase Expected to reach an annual dismantling capacity of 100 aircraft by 2025 CADC simulation rendering 10

11 Value Added Marketing Capabilities Show Case Marketing & Placement Capabilities Proven ability to provide a wide range of services Tailored solutions addressing operational technical needs of our clients Qualifies our offer to serve major airlines, regional or start-ups airlines Illustrative examples of our marketing and placement capabilities Trade in of three 24 years old A and lease of 6 A320 from our order book Identification and sale of the 3 A300 to an overseas cargo operator Lease transaction of 4 used aircraft executed in a tight timeframe Strong capability to source suitable aircraft from international market Placement of three A320 with start-up Qingdao Airlines Assisted QDA to set up the operations Placement of 6 A320 from our order book to China Eastern Airlines Highly technical aspects managed in a very tight timeframe Help QDA launching Airbus aircraft type 11

12 Supporting Efforts for Globalisation Aircraft Buy & Sell Sourcing new/old aircraft globally Sale the aircraft worldwide Aircraft Leasing Lease the aircraft to worldwide airlines Place the aircraft globally Aircraft Parts Sales Build the global network to sell the aircraft parts and materials Finance Structure aircraft acquisition financing with worldwide banks/financial institutions e.g. ECA,TD,DVB,BOT,KDB Signature deals Date Total of six second hand aircraft bought from Air Berlin Sold three old aircraft at age of 24 years to MNG Airlines 2013 Four aircraft bought from AirAsia 2014 Five A320 aircraft lease agreement signed with Air India 2014 Signing of LOI with Pegasus for the lease of two A320 aircraft 2015 Three aircraft financing backed by a guarantee issued by UK Export Finance(as fronting ECA)

13 Flexible and Diversified Finance Channels 1. Realise lease receivables realise the unearned finance income and accelerate asset rotation and bank borrowing repayment five aircraft lease receivables are sold to the investors during ECA financing an important international financing support alternative for our global business expansion strategies three aircraft financing backed by a guarantee issued by UK Export Finance (fronting for the ECA) (Aug 2015) 2. Bank borrowings As the key source to finance aircraft acquisition Include aircraft finance, predelivery payment(pdp), working capital facilities Medium Term Notes successful issuance of CALC s first medium term notes in China of RMB340m rated AA by China Cheng Xin International(July 2015) 3. Convertible bonds HKD892m (equivalent to USD 115m) invested by Huarong International and Great Wall Pan Asia Internation in March, China Everbright in May

14 Strategy Supporting Project - Globalisation China Aircraft Global Fund (CAG) We are seeking to build a China Aircraft Global Fund (CAG) to serve as a new platform. Institutional investors are showing strong appetites for aircraft asset Objective: CAG seeks to capture the increasing global demand for aircraft leasing and management solutions and further drive business growth of CALC Bring new investors including insurance companies, pension fund and high net worth individuals to aviation industry by offering them long term stable return investment opportunities Additional source of income for CALC as an asset manager Lessened debt burden and reduce gearing ratio of CALC Strengthen our bargaining power with Airbus or Boeing for making new bulk purchase Overview: CAG s business is focused on aircraft leasing and transactions incidental to leasing, trading and financing of aircraft. CAG will establish a business model for direct aircraft purchase and lease transactions and aircraft sale and leaseback transactions with leading airline operators globally. Structure: CAG is a composite fund comprising of shares, junior debt and senior debt with target size of USD 1 billion. CAG will leverage on all of CALC successful elements, and target to establish a global platform 14

15 Key Financial Figures

16 Liabilities Profile As of 30 Jun 2015 Bank and LT borrowings for aircraft HK$ 17 billion (93% of total liabilities) Bank borrowing interest rate: 2.73%~6.87%, average 4.69% Due within one year: 21.69% Total liabilities HK$ 18 billion Others: Mainly lease deposit Convertible bonds: HK$778million HK$ 534million (3.0% of total liabilities) Derivative financial liabilities: Mainly due to interest rate swap HK$ 42 million (0.2% of total liabilities) 16

17 Cash & Banking Facilities Cash and banking facilities As at 30 June 2015 As at 31 December 2014 Cash and bank balance HK$ 1,297 million HK$ 1,644 million Facilities granted HK$ 18 billion HK$ 17 billion Utilised 96.1% 97.5% Major MOU/Master Agreement signed with banks China Development Bank (purchase of aircraft) Export-Import Bank (purchase of aircraft) China Construction Bank (purchase of aircraft) Bank of Comm (arranger of securitisation and debenture issuances) China Everbright Group As at 30 June 2015 USD 1.5 billion (Jun ) RMB 10 billion (equivalent to *USD m ) (Nov ) RMB 4.4 billion (equivalent to *USD m ) (Jun ) 20 aircraft realisation of lease receivables (Mar ) Loan services frame agreement Realisation of lease receivables frame agreement (May ) Exchange rate: 1 USD=6.376 CNY 17

18 Key Ratios Total assets Total equity HK$ million HK$ million As at 31 Dec As at 30 June As at 31 Dec As at 30 June 18,313 20,040 1,781 1,950 6,889 12, Return on Equity Gearing^ As at 31 Dec As at 31 Dec As at 30 June % 21.1% 22.4% ^Bank, long term borrowings and convertible bonds/total assets 18

19 Revenue Analysis H Revenue and other income breakdown Revenue HK$ million HK$ million As at 31 Dec As at 30 June 800 Total: ,145 Total: H H Lease income Others 19

20 Net Profit Analysis 1H2015 Net profit after tax Net profit after tax HK$ million HK$ million 150 Net Profit As at 31 Dec As at 30 June Total: Total: H H2014 1H Net Profit 20

21 Interim Results For the six months ended 30 June HK$ million Change Revenue and other income % Profit before tax (NPBT) * +82.9% Profit attributable to Owners of the Company % Basic earnings per share (HK$) % Dividends per share (HK$) N/A Dividend payout ratio 20.2% 0 N/A *Note: After taking into account of IPO listing expense HK$24.7 million for the six months period ended 30 June 2014 but no such expenses in 2015.

22 Fleet and Expansion

23 Fleet Expansion 1 Fleet expansion plan 2 Aircraft Delivery Schedule Committed aircraft delivery Actual fleet size : 57 (as of 30 October 2015) F 2022F Delivered To be delivered Total Fleet expansion strategies: Neutral growth with order book New /old aircraft SLB Portfolio trade and pop up orders Placement status All aircraft scheduled for 2016 has been fully place out Lease arrangement in advance 12 months of aircraft delivery date 111 aircraft remain on our order book with Airbus Aim to build a portfolio of 100 commercial aircraft by

24 Fleet Breakdown Fleet breakdown by aircraft type No. of aircraft as of 30 Oct 2015 Average age of CALC aircraft Young and modern fleet 4 5 1H aircraft FY Airbus330 series Boeing B737 NG Airbus A319/320/321 series FY Airbus A320 series aircraft is popular in the market for its wide operator base, excellent operating economies and strong residual value

25 Diversified Customer Portfolio (5) (1) (1) (3) (10) (4) (5) (9) (5) (6) (8) Fleet size: 57 aircraft (as of 30 October 2015) 25

26 Risk Control

27 Risk Control In order to achieve an appropriate balance between risk and return and minimize the potential adverse effects on our financial performance: Counterparty risk: monitoring country risks and their currency volatility, based on our industry research, counterparty credit rating, analysis of travel demand growth, unique business model, steady financial condition, and shareholders support(i.e. state owned) to strengthen our risk control Asset risk: limited asset risk by cautious aircraft model selection, monitoring aircraft price trend, safety record and production capacity of aircraft model to enhance our control over asset risk (i.e. aircraft model with high leasing demand, low RV risk and stable market price) Financial market risk: Currency risk: minimise the currency risk by matching the lease receivables and borrowings under the same currency Interest rate risk: manage interest rate risk by way of matching the interest rates of the lease receivables with interest rates of bank borrowings Liquidity risk: reduce liquidity risk by matching the maturity of the lease term and the loan term and daily monitoring with the following objectives: maintaining the stability of the leasing business, projecting cash flows and evaluating the level of current assets, and maintaining an efficient internal fund transfer mechanism to ensure liquidity of the Group Business Operation risk: minimise the operation risk by aircraft insurance cover, director and officer liability insurance cover, tax structure planning and arrange lease in advance of delivery of aircraft for 12 months Corporate/compliance risk: manage compliance risk by applying HK listing rules as well as other regulations in different area of business activities, and implement anti-corruption policy to ensure a strong corporate governance of the Group. Target to reduce current gearing ratio to gradually improve the ability to resist risks and in support of sustainable growth of the business Separate project financing arrangements to match different aircraft purchases and leases 27

28 Remove Financial Market Risk Stringent interest risk control Natural hedge on currency exchange rate No. of aircraft as at 30 June 2015 No. of aircraft as at 30 June 2015 Fixed Rental v.s. Fixed Interest Fixed rental vs Fixed interest 19 USD USD rental vs USD USD loan 41 Fixed Rental v.s. Floating Interest with Hedging Fixed rental vs Floating interest with Hedging 8 Floating Rental Floating rental v.s. vs Floating Floating Interest interest 3 RMB RMB rental vs RMB RMB loan 4 Realisation Realisation 5 Fixed Rental v.s. Floating Interest w.o. Hedging Fixed rental vs Floating interest w/o Hedging 15* Realisation Realisation 5 *We will use interest rate swap arrangements for those aircraft with interest rate mismatch subject to allowing the flexibility of realisation and aircraft fund arrangement Currency 100% prefect match for asset investment Close monitoring LIBOR swap Maturity match for lease term and loan term 28

29 Management

30 Management Team Name and title Mr. Chen Shuang Chief Executive Officer Executive Director Chairman Ms. Winnie Liu Wanting Executive Vice President Executive Director Mr. Barry Mok Chung Tat Chief Financial Officer Major responsibilities Director and deputy general manager of China Everbright Holdings Company Limited, and the CEO of CEL Responsible for formulating and reviewing the Group s overall strategic planning and managing overall business operations. Ms. LIU joins company in She has establishes extensive network with airlines, banks, financial institutions, governments, as well as manufacturers She has led team to place 60+ new and used aircraft to more than 10 airlines in Greater China region, closed over USD 2billion financing under various structure. She also led team complete several aircraft trading projects, involves young aircraft purchase and very old aircraft sales. Participated in the negotiation of aircraft order book and participated in capital market transactions, such as CALC s IPO, issuance of convertible bonds in HK and mid-term notes in China. She is also participate in the launching of CALC s aircraft disassembly factory. Over 30 years of experience in corporate, banking and finance with extensive knowledge in debt capital market Previously the Chief Executive of BOCI Capital and Executive Director of Hopewell Holdings Limited (054.HK) and Hopewell Highway Infrastructure Limited (737.HK) Leads and oversees the accounting, finance and treasury functions, corporate functions including banking and investor relations, company secretary, and human resources and administration Mr. Pitney Tang Yu Ping SVP Banking & Transaction Over 20 years of experience in corporate development, financial management, consulting for aircraft leasing, aviation logistics, corporate finance advisory and manufacturing Responsible for transaction planning and closing as well as debt and structured finance 30

31 Management Team (cont.) Name and title Major responsibilities Mr. Jens Dunker SVP-Aircraft Trading and Global Marketing Mr. Duan Xiaoge SVP-Technical and Asset Management Mr. Patrick Liu Fu Wah Chief Operating Officer Over 21 years of experience in the aircraft industry, focusing on aircraft purchase and financing In charge of aircraft asset trading and global marketing Over 27 years of experience in the aircraft industry, focusing on aircraft maintenance and engineering, project consultancy and planning Acted as independent contracted technical consultant of GE Capital Aviation Services Responsible for technical and asset management Held senior positions in KPMG, Standard Chartered Bank (HK) Limited, and a Hong Kong listed company Over 18 years in audit, investment, operational risk, and financial management Mr. Christian Mc Cormick Managing Director Finance Leading expert in aircraft finance solutions with 30 years of experience in the financial services industry, Ex-CEO of Natixis Transport Finance Covers the Group s international financing initiatives, with primary focus on capital market initiatives on the international markets Ms. Aikaterini Somi Legal Counsel Over 8 years of practiced as a solicitor in commercial and banking litigation, international and aviation transactions Acted as corporate counsel for global aircraft leasing company-ilfc Responsible for all legal issues pertaining to the international (non-prc) aircraft related transactions of the Group s business. 31

32 Appendix

33 Company Overview About CALC 2015 interim results highlights Stock code : HK Listing date : 11 July 2014 Listing price : HK$5.53 No. of issued shares (30 Oct 2015) : 605,890,800 shares +47.0% yoy Revenue and other income +85.8% yoy Net profit for the period +47.8% yoy EPS Stock price (30 Oct 2015) : HK$7.92 Market cap (30 Oct 2015) : HK$4.80 billion Constituent stock of MSCI China Small Cap/Hang Seng Composite Indexes HK$0.04 Interim dividend per share 50 aircraft (as of 30 Jun 2015) Stock price performance Growth drivers HK$ Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 million Globalisation strategy Diversify client base Increase overseas market share Downstream expansion to aircraft disassembly Capture the full value chain of aircraft life cycle Open new revenue streams Aggressive fleet expansion: Target 168 aircraft in 2022 Diversified financing structure: Realisation for lease receivables China Aircraft Global Fund (CAG) Volume Closing price 33

34 Positions of CALC As indicated in the graph shown above, CALC has attained a ROE of 22.4% in 2014, transcending its international counterparts. This demonstrates CALC s earning capability in investing equity. CALC also demonstrated a very strong growth rate in terms of the 3 year average revenue growth as compared with its peers. Source: CALC database (Figures are calculated from the financial data presented in their respective annual reports) In order to manage their fleet more efficiently, airlines demand of operating leases has grown significantly over recent years. Source: Back Aviation database and Air Lease prospectus 34

35 Thriving Air Industry in China (cont.) (kilometers) 2013 RPK per capita in China, the US and the world 2013 Passenger aircraft per million people in China, the US and the world (No. of aircraft) The US 3,019 The US 17.2 Global 765 Global 2.7 China 335 China ,000 1,500 2,000 2,500 3,000 3,500 Source: Ascend Report Source: Ascend Report Aircraft deliveries in 2015 Forecasted China s air passenger by 2015 (million passengers) % Funded by lessors USD120.6 billion 60% Source: Current Aircraft Finance Market Outlook Issued in December 2014 by Boeing Capital Corporation 0 Source: Ascend Report F 35

36 Corporate Milestones Establishment of CALC (BVI) Fleet size reached 5 aircraft China Everbright Limited became strategic shareholders of CALC Fleet size reached 10 aircraft Structured and completed the first transaction with China Eastern Airline through purchasing 3 aircraft for sale to a foreign airline operator Completed the first realisation transaction of finance lease receivable in respect of one aircraft Fleet size reached 25 aircraft CADC completed auction process of land acquisition; Construction initiates Issuance of Medium Term Notes of Rmb340 million and Convertible Bonds of HKD million Fleet size reached 50 aircraft July 2015 Structured and completed the first sale and leaseback transaction with China Southern Airlines Structured and completed the first direct purchase and lease transaction, pursuant to which acquired an A320 from a European airline operator Established CALC (Tianjin) in Tianjin Dongjiang Free Trade Zone Entered into the Aircraft Purchase Lease for 36 Airbus current generation A320 family aircraft China Aerospace Investment Holdings Limited became shareholders of CALC Listed on the Hong Kong Stock Exchange, stock code: HK MOU for the establishment of CADC Bulk purchase of 100 Airbus A320 series aircraft Fleet size reached 44 aircraft 36

37 Momentums across the Business First WOFE aircraft lessor established in Tianjin Dongjiang Free Trade Port Zone in 2010 CALC listed on the main board of the HKEx in Jul 2014 Successful delivery to Air India and marked the delivery CALC s 55th aircraft in Sep 2015 Entered into purchase agreement for 100 aircraft with Airbus in Dec 2014 Delivery of CALC s 50th aircraft in Jun

38 Balance Sheet HK$ million As at 30 Jun 2015 As at 31 Dec 2014 Change Net finance lease receivables 13,302 11, % Property, plant and equipment 1,666 1, % Cash and bank balance 1,297 1, % Total assets 20,040 18, % Total borrowings (including convertible bonds) 17,514 15, % Total liabilities 18,090 16, % Total equity 1,950 1, % Gearing (= total borrowings/total assets) 87.4% 87.3% +0.1 p.p. 1H2015 1H2014 Change Capital expenditure for aircraft acquisition 2, , % 38

39 Consolidated Income Statement For the six months ended 30 June (HK$ 000) Revenue and other income 635, ,409 Finance lease income 461, ,031 Operating lease income 109,114 73,742 Other income 65,462 16,636 Expenses (477,458) (361,403) Interest expense Depreciation Operating expenses (337,230) (237,625) (44,588) (27,521) (95,640) (96,257) Operating profit 158,276 71,006 Foreign exchange gains/(losses) (466) 15,283 Profit before income tax 157,810 86,289 Income tax expense (41,083) (23,490) Profit attributable to Owners of the Company 116,727 62,799 Earnings per share attributable to owners of the Company Basic earnings per share HK$0.198 HK$

40 Consolidated Balance Sheet For the six months ended 30 June For the year ended 31 December (HK$ 000) Total assets 20,039,787 18,313,040 Property, plant and equipment 1,666,442 1,706,695 Finance lease receivables net 13,301,676 11,443,485 Derivative financial assets 14,104 14,979 Prepayments and other receivables 3,760,824 3,503,360 Restricted cash 185, ,951 Cash and cash equivalents 1,111,697 1,425,570 Equity / Equity attributable to owners of the Company Share Capital 60,584 58,578 Reserves 1,418,653 1,273,531 Retained earnings Proposed dividends 24,234 93,725 Others 426, ,446 1,930,438 1,761,280 Non-controlling interests 19,465 19,416 Total equity 1,949,903 1,780,696 Total liabilities 18,089,884 16,532,344 Deferred income tax liabilities 97,971 67,161 Bank borrowings 16,094,019 15,342,648 Long-term borrowing 641, ,116 Convertible bonds 778, Derivative financial liabilities 42,084 33,361 Income tax payables 19,623 21,991 Interest payable 51,425 42,411 Other payables and accruals 364, ,656 Total equity and liabilities 20,039,787 18,313,040 40

41 Thank you Disclaimer: This document may contain statements that constitute forward-looking statements, including, but not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other statutory requirements may render actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates and interest rates, (3) competitive pressures, (4) technology developments, (5) changes in the financial position or creditworthiness of our customers, obligors and counterparts, and changes in the developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our business group structure and (8) other key factors that may adversely affect our business and financial model. We are not under any obligations to (and expressly disclaim any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise. This material may not be reproduced, distributed or transmitted to any other persons or incorporated in any way into another document or other material without the prior written consent from us. This document is not: (a) an offer of securities for sale in Hong Kong or elsewhere; or (b) an invitation to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities; or related to the issue of any securities. This document (and the information contained herein) is not for publication or distribution to any person(s) except as permitted by us. 41