China, ASEAN, And Taiwan Markets Will Unlock Sustainable Opportunities

Key Takeaways

• Strengthening asset quality, solar leadership, and regional diversification are driving earnings resilience and growth, especially through sustainable finance and robust ASEAN performance.
  
• Investment in digital platforms and partnerships with OEMs supports underwriting efficiency, market expansion, and stable margins across key Asian markets.
  
• Weak demand, rising asset quality risks, currency headwinds, shrinking growth segments, and weakening operational leverage threaten future profitability and revenue expansion.

Catalysts

An investment holding company, provides leasing and financial services in Taiwan, China, ASEAN countries, and internationally.

• Early signs of stabilization and potential improvement in asset quality-especially in China and ASEAN (excluding Thailand)-suggest that portfolio impairments may decrease. This could lead to lower credit costs, supporting future earnings growth as economic conditions stabilize in these core Asian growth markets.
  
• The company's solar business remains the leading player in the Taiwanese market, with management targeting sustained growth in line with overall market expansion and deepening involvement in large-scale ground projects. This positions Chailease to capture additional fee and interest income from the ongoing shift toward sustainable infrastructure and green equipment financing, which is expected to lift medium
• to long-term revenue and support premium pricing.
  
• Positive momentum in ASEAN (excluding Thailand) is evidenced by double-digit local currency portfolio growth, improved credit performance in Vietnam and Malaysia, and rising profit contribution from these markets, all reflecting robust regional economic expansion and rising demand for alternative financing. This diversification reduces earnings volatility and supports consolidated revenue growth.
  
• Continued investment in digital lending platforms and proprietary risk management is poised to enhance underwriting efficiency and help maintain or improve net interest margins-especially as management focuses on quality growth and wants to maintain stable pricing/spreads across key segments.
  
• Strengthened partnerships with OEMs/dealers and deep roots in multiple Asian markets position Chailease to benefit as more SMEs and corporates adopt asset-light operating models and access non-bank financial solutions via digital channels, incrementally expanding the addressable market and driving top-line growth.

Chailease Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Chailease Holding's revenue will grow by 35.2% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 33.9% today to 18.5% in 3 years time.
• Analysts expect earnings to reach NT$27.4 billion (and earnings per share of NT$15.29) by about September 2028, up from NT$20.3 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting NT$30.7 billion in earnings, and the most bearish expecting NT$22.6 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.9x on those 2028 earnings, up from 9.6x today. This future PE is lower than the current PE for the TW Diversified Financial industry at 20.1x.
• Analysts expect the number of shares outstanding to decline by 0.12% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.32%, as per the Simply Wall St company report.

Chailease Holding Future Earnings Per Share Growth

Risks

• Prolonged weakness and decline in credit portfolio growth in core regions (China: -5%, ASEAN: -4%, consolidated: -3% YoY), partly due to economic uncertainty and conservative risk appetite, signals weak demand and hinders future revenue and earnings growth.
  
• Increasing delinquency ratios across all major regions (China: 6%, Taiwan: 3.3%, ASEAN: 5.2%; rising from prior quarters) and elevated impairment losses (China: net profit down 29% YoY due to impairment) indicate deteriorating asset quality among core SME borrowers, posing a risk to net margins and profitability.
  
• Appreciation of the Taiwan dollar versus RMB and other Asian currencies is reducing the reported value of portfolios and revenues in local currency terms, creating FX headwinds that could persist and dampen consolidated financial results.
  
• Shrinking and de-emphasized used car installment financing in Taiwan (management reducing exposure to problematic agent-driven segment), alongside slowing solar asset growth due to market maturity and regulatory complexity, lowers the potential for significant revenue expansion in these areas.
  
• Persistently higher cost-to-income ratio (up to 30% from 27% YoY) driven by flat or declining revenue and largely fixed OpEx structure suggests operational leverage is weakening, which could further pressure net profit and ROE if growth does not rebound.

Valuation

• The analysts have a consensus price target of NT$134.918 for Chailease Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NT$157.84, and the most bearish reporting a price target of just NT$106.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NT$147.9 billion, earnings will come to NT$27.4 billion, and it would be trading on a PE ratio of 9.9x, assuming you use a discount rate of 6.3%.
• Given the current share price of NT$116.0, the analyst price target of NT$134.92 is 14.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.