中银航空租赁(02588) - 2023 - 中期财报

Financial Overview The company achieved a turnaround in H1 2023, reporting a net profit after tax of $262 million compared to a $313 million net loss in the prior period, supported by a 4% asset growth to $22.9 billion and strong liquidity Key Financial Indicators for H1 2023 | Metric | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Total Operating and Other Income | $1,061 million | $1,196 million | | Net Profit/(Loss) After Tax | $262 million | ($313) million | | Core Net Profit After Tax | $262 million | $206 million | | Earnings/(Loss) Per Share | $0.38 | ($0.45) | | Core Earnings Per Share | $0.38 | $0.30 | | Interim Dividend | $0.1131/share | $0.0889/share | - As of June 30, 2023, total company assets reached $22.9 billion, a 4% increase from the end of 2022[7] - The company maintains strong liquidity, with $547 million in cash and short-term deposits and $5.2 billion in undrawn committed loan facilities at period-end[7] Fleet and Operations Overview As of June 30, 2023, the company's fleet (including orders) totaled 652 aircraft, with 404 owned aircraft and 213 on order, demonstrating strong H1 operational performance with 99% aircraft utilization and a 101.8% airline customer cash collection rate Fleet Composition (As of June 30, 2023) | Category | Quantity | | :--- | :--- | | Owned Aircraft | 404 aircraft | | Managed Aircraft | 35 aircraft | | Ordered Aircraft | 213 aircraft | | Total | 652 aircraft | - The owned and managed fleet serves 91 airlines across 42 countries and regions, indicating broad geographical diversification[9] - Operational metrics showed excellent performance, with owned aircraft utilization at 99% and airline customer cash collection rate improving from 96.9% in the prior-year period to 101.8%[9] Half-Year Business Review In H1 2023, the company's business resumed growth, achieving a net profit after tax of $262 million and successfully turning around, driven by strong global passenger traffic recovery, increased demand for new aircraft, and a 9% increase in operating income (excluding non-recurring items) - Strong global passenger traffic recovery was a key driver of business growth, with H1 2023 passenger traffic increasing 47% year-on-year and load factors reaching 2019 levels, boosting demand for new aircraft[25] - Operating efficiency significantly improved, with off-lease aircraft reducing from 17 in the prior-year period to just 2, demonstrating growing airline demand[27] - Excluding non-recurring income from lease terminations in H1 2022, total operating and other income increased 9% year-on-year[27] - The company demonstrated strong capital market performance, issuing $1 billion in bonds in H1 with oversubscription and achieving the narrowest spread among global lessors since January 2022[28] Business Overview BOC Aviation is a leading global aircraft operating lessor, Asia's largest, generating revenue from USD-denominated long-term leases, supported by investment-grade credit ratings and Bank of China, ensuring low funding costs and $5.7 billion in available liquidity - The company is positioned as a leading global aircraft operating lessor, headquartered in Asia with extensive international management experience[29] - As of June 30, 2023, the company's fleet (including managed and ordered aircraft) serves 91 customers in 42 countries and regions, with 213 new technology aircraft on order for delivery through end-2029[29] - The company holds investment-grade credit ratings of Fitch and S&P A-, with strong support from Bank of China, including a $3.5 billion undrawn revolving credit facility, ensuring low-cost and diversified funding channels[29] Management Discussion and Analysis Income Statement Analysis In H1 2023, the company achieved a net profit after tax of $262 million, a 27.2% increase from prior-year adjusted core profit, driven by a 7.2% rise in lease rental income to $940 million, partially offset by a 29.7% increase in finance expenses Income Statement Item Changes (Thousand USD) | Item | H1 2023 | H1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Lease Rental Income | 940,081 | 876,788 | 7.2% | | Total Operating and Other Income | 1,060,753 | 1,196,140 | (11.3)% | | Aircraft Impairment | 3,300 | 850,571 | (99.6)% | | Finance Expenses | 296,462 | 228,548 | 29.7% | | Net Profit/(Loss) After Tax | 261,555 | (312,548) | 183.7% | - Total operating and other income decreased 11.3%, primarily due to a $223 million one-off income from Russian lease terminations in the prior-year period; excluding this impact, total income increased 9.0%[32] - Finance expenses significantly increased 29.7%, mainly due to the average cost of funds rising from 2.9% in the prior-year period to 3.9%[27][41] Statement of Financial Position Analysis As of June 30, 2023, total assets increased 3.8% to $22.9 billion and total equity grew 3.0% to $5.4 billion, driven by a 2.4% rise in aircraft assets, while trade receivables decreased 26.3% and loans increased 4.3% to $15.8 billion Statement of Financial Position Item Changes (Thousand USD) | Item | June 30, 2023 | December 31, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Property, Plant and Equipment | 21,115,218 | 20,628,570 | 2.4% | | Trade Receivables | 120,348 | 163,267 | (26.3)% | | Cash and Short-Term Deposits | 547,416 | 396,866 | 37.9% | | Loans and Borrowings | 15,779,389 | 15,121,665 | 4.3% | | Net Assets | 5,357,605 | 5,202,099 | 3.0% | - Trade receivables significantly decreased 26.3%, primarily due to improved collections from lessees[51] - The increase in total equity is mainly attributable to the profit recorded during the period, partially offset by $123 million in dividend payments[58] Other Information This section details the company's liquidity, debt structure, future investment plans, and human resources, highlighting ample liquidity, a stable debt-to-capital ratio of 3.0 times with predominantly unsecured debt, $11 billion in future capital expenditure commitments, and foreign exchange risk management Liquidity and Funding Sources The company's liquidity sources include operating cash flow, aircraft sales, and borrowings, with H1 2023 operating cash flow (net of interest) at $721 million, $1.7 billion in new funding raised, and $547 million in cash plus $5.2 billion in undrawn committed loan facilities - Operating cash flow (net of interest) for H1 2023 was $721 million, consistent with the prior-year period[60] - A total of $1.7 billion in new funds was raised in H1 through note issuances and new bank financings[60] Debt As of June 30, 2023, the company's total debt-to-capital ratio was 3.0 times, a slight increase from 2.9 times, with total debt at $15.86 billion, predominantly unsecured, and $1.4 billion due within the next year Debt-to-Capital Ratio | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Debt (million USD) | 15,861 | 15,197 | | Total Equity (million USD) | 5,358 | 5,202 | | Total Debt-to-Capital Ratio (times) | 3.0 | 2.9 | - The debt structure is healthy, with secured debt accounting for less than 1% of total debt, and the net book value of unencumbered aircraft reaching $18.9 billion[64][65] Foreign Exchange Risk The company's transactional currency exposure primarily arises from non-USD denominated borrowings, which are converted to USD-denominated through cross-currency interest rate swap contracts to eliminate foreign exchange risk - The company uses cross-currency interest rate swap contracts to hedge all non-USD denominated financial liabilities, eliminating foreign currency exposure[67] Future Significant Investment Plans As of June 30, 2023, the company's total estimated cash outflows for aircraft capital expenditure commitments amounted to $11 billion, primarily concentrated in 2026 and beyond ($7.3 billion), indicating long-term fleet expansion plans Estimated Aircraft Capital Expenditure Commitments (Billion USD) | Period | Amount | | :--- | :--- | | H2 2023 | 1.0 | | 2024 | 1.8 | | 2025 | 0.9 | | 2026 and Beyond | 7.3 | | Total | 11.0 | Funding Channels The company's aircraft acquisition commitments will be funded through diversified channels including operating cash flow, note issuances, bank financing, and aircraft sales, with strong funding access supported by A- investment-grade credit ratings and 48 financial institutions, primarily through unsecured notes and loan facilities - The company holds strong investment-grade credit ratings of Fitch and S&P A-, and benefits from ongoing support from 48 financial institutions[69] - As of June 30, 2023, the company had $5.2 billion in undrawn committed unsecured loan facilities, including $3.5 billion from Bank of China[69] Employees As of June 30, 2023, the company had 195 employees, offering comprehensive benefits and incentive programs, including short-term cash incentives and long-term equity-based plans (Restricted Share Units) to attract and retain talent, with personnel expenses representing a low 2.4% of total revenue - As of June 30, 2023, the number of employees was 195, an increase from 187 in the prior-year period[70] - Employee incentive plans include short-term cash bonuses and long-term incentives based on Restricted Share Units (RSUs)[70] General Information Dividend Policy and Interim Dividend The company's dividend policy aims to distribute up to 35% of full-year net profit after tax, with the Board declaring an interim dividend of $0.1131 per share for 2023, representing 30% of net profit after tax, payable on October 12, 2023 - The company's dividend policy targets a payout of up to 35% of annual net profit after tax[72] - The Board approved an interim dividend of $0.1131 per share for 2023, a 27% increase from the prior-year period[3][73] Significant Equity Interests As of June 30, 2023, the company's primary controlling shareholder is Sky Splendor Limited, through which Bank of China and Central Huijin Investment Ltd indirectly hold 70% of the company's shares, with FIL Limited holding an additional 9.99% Major Shareholder Holdings | Shareholder Name | Capacity | Shareholding (%) | | :--- | :--- | :--- | | Central Huijin Investment Ltd | Interest in Controlled Corporation | 70% | | Bank of China | Interest in Controlled Corporation | 70% | | Sky Splendor Limited | Beneficial Owner | 70% | | FIL Limited | Beneficial Owner/Interest in Controlled Corporation | 9.99% | Restricted Share Unit Long-Term Incentive Plan The company operates two Restricted Share Unit (RSU) plans to incentivize employees: one for FY2017-2021 awards and a second adopted in 2023 for FY2022-2025 awards, both implemented through trustee purchases of existing shares in the secondary market without issuing new shares, with new awards granted in H1 2023 - The company has two parallel Restricted Share Unit (RSU) plans covering awards for FY2017-2021 and FY2022-2025, respectively[82] - On June 9, 2023, new awards were granted under the RSU plan, with General Manager Mr. Robert James MARTIN receiving 144,375 units and Deputy Chairman Ms. Zhang Xiaolu receiving 77,190 units[84][85] Corporate Information Corporate Information This section provides core corporate information, including Board members, senior management, principal place of business, registered office, independent auditor (PwC), credit ratings (Fitch A-, S&P A-), and Hong Kong Stock Exchange stock code (2588) - The Chairman is Mr. Liu Jin, and the Managing Director and Chief Executive Officer is Mr. Robert James MARTIN[96][97] - The company's credit ratings are Fitch A- and S&P Global Ratings A-[97] - The company is listed on the Hong Kong Stock Exchange with stock code 2588[97] Appendix – Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Income Statement In H1 2023, the company reported a pre-tax profit of $295 million and a net profit after tax of $262 million, with basic and diluted earnings per share both at $0.38, marking a significant turnaround from the $313 million net loss in H1 2022 due to an $804 million impairment of aircraft in Russia Income Statement Summary (Thousand USD) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Operating and Other Income | 1,060,753 | 1,196,140 | | Profit/(Loss) Before Tax | 295,275 | (346,865) | | Net Profit/(Loss) for the Period | 261,555 | (312,548) | | Basic Earnings/(Loss) Per Share (USD) | 0.38 | (0.45) | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2023, total company assets were $22.918 billion, total liabilities were $17.560 billion, and net assets (total equity) were $5.358 billion, with non-current assets, primarily $21.115 billion in property, plant, and equipment (aircraft), constituting the majority of total assets Statement of Financial Position Summary (Thousand USD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | 22,917,534 | 22,071,375 | | Total Liabilities | 17,559,929 | 16,869,276 | | Net Assets | 5,357,605 | 5,202,099 | Interim Condensed Consolidated Cash Flow Statement In H1 2023, the company generated $1.024 billion in net cash from operating activities, demonstrating strong cash generation, with net cash outflow from investing activities of $1.094 billion primarily for aircraft purchases, and net cash inflow from financing activities of $217 million, increasing period-end cash and cash equivalents to $539 million Cash Flow Statement Summary (Thousand USD) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 1,024,013 | 946,169 | | Net Cash Flows Used in Investing Activities | (1,093,657) | (109,781) | | Net Cash Flows From/(Used in) Financing Activities | 216,930 | (870,465) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 147,286 | (34,077) | Notes to the Financial Statements (Selected) The notes to the financial statements provide detailed explanations and supplementary information for the primary financial statements, with key notes including Property, Plant and Equipment (Note 9) detailing aircraft asset movements and impairments, Loans and Borrowings (Note 16) disclosing debt composition, maturities, and interest rate structures, and Commitments (Note 22) revealing significant future commitments for operating leases, finance leases, and capital expenditures, including $11 billion in future aircraft purchase capital expenditure commitments - As of June 30, 2023, the company had committed to purchase multiple aircraft, with future committed capital expenditures totaling approximately $11 billion through end-2029[178] - Under irrevocable operating leases, the company's existing aircraft have future minimum lease receivables totaling $14.237 billion[172][173] - The company has filed formal claims with insurers and initiated legal proceedings in the Irish High Court regarding 17 aircraft stranded in Russia[132]