Company Profile

Bohai Financial Investment Holding Co., Ltd. is primarily engaged in financial leasing activities in China.The company's business scope covers enterprise asset restructuring, merger & acquisition, and projectplanning; financial adviser; information consulting services; transportation, power and energy, newtechnology and new materials investments; hotel management; Marina facilities investment; leasingand trust investments; other business approved by The Ministry of Commerce.

Investment highlights

Payment for Avolon’s stake and losses of investment in Bohai Life (CNY 92 million) reduced earnings.Bohai Financial Investment Holding bought 100% stake in Avolon which made CNY 490 million netincome in 16H1. And it had signed an asset pool purchase agreement with GECAS covering 45 airplanes,further consolidating its leadership position on the global market.

Container leasing and second‐hand container sales suffered 12.91% fall as a result of doom in seatransportation industry. Integration of Seaco and Cronos is underway, which may improve theCompany’s operating efficiency in the field.

Leasing business sustains high‐speed growth in China. Registered capital of Tianjin Bohai went up to CNY15 billion. The gross profit margin of infrastructure, road and bridge construction and rail transportationincreased by 20.23% YoY to 50.16%. The scale of Wan Jiang Financial Holding grew by 86.6% YoY to CNY33.4 billion. The net profit stood at CNY 331 million, up 52% YoY.

Bohai Financial Investment Holding raised CNY 16 billion through private placement, CNY 8.7 billion ofwhich has been used. It still takes time for the investment to take effect.Earnings Forecast and Investment Grading:We expect the net profit attributable to shareholders to be CNY 1.7 billion in 2016, CNY 2.2 billion in2017 and CNY 2.5 billion in 2018. EPS will be CNY 0.27, CNY 0.35 and CNY 0.40 respectively. ReiterateBuy.

Potential risk: FX risk, macro economy, worse‐than‐expected effect of internal integration.