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On Wednesday, UBS analyst Alex Ye revised the price target for Chailease Holding Co Ltd (5871:TT) downwards to NT$106.00, a decrease from the previous NT$110.00. Despite the price target adjustment, the firm’s Sell rating on the company’s stock remains unchanged.
Chailease Holding reported a year-over-year earnings decline of 5% for the first quarter of 2025 and 7% for the first four months combined. When excluding a Rmb200bn tax rebate received in March 2025, the year-over-year decline for the same periods would be 16% and 15%, respectively. The monthly earnings run rate, not accounting for the tax rebate, was NT$1.65bn in the first four months of 2025, which is an improvement from the fourth quarter of 2024’s NT$1.39bn but still below the monthly average of NT$1.88bn for the full year of 2024.
The slight sequential improvement in earnings was largely due to reduced credit costs across all three regions where Chailease operates. However, the absolute credit cost in China remains high at 4.8%, despite a decrease from the 5.5% seen in the fourth quarter of 2024 and an increase from 3.2% in the third quarter of that year. While asset quality indicators in Taiwan and the ASEAN region have shown signs of stabilization or improvement, those in China have continued to deteriorate marginally.
Portfolio growth has been subdued quarter-over-quarter, with China’s loan growth particularly sluggish, showing a 3% decrease in Renminbi terms. Additionally, the lending spread in Taiwan saw a notable decrease of 31 basis points quarter-over-quarter, which UBS anticipates could negatively surprise the market.
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