- benefit from appreciation of Yuan. From income statement, the financial income growth for Yuan appreciation leads to exchange rate benefit has contributed for 8 millions in 1H
- benefit from the decrease in Oil price in 1H and the operating expense has dropped 2 %
- high operating leverage ( over 90% of revenue ) causing the net income increases drastically when the operating expense decrease 1-2 %
- will benefit from decrease in corporate Tax rate from 33% to 25 % in 2008 but it has also lead to decrease in defer tax asset and increase tax payment this year
- one-off income growth due to income from associate (should be Cathy Pacific) from 2006 0.1 billion to 0.48 billions. The growth will sure be slow down as the base has been increased.
- I expect the revenue growth could be maintained. But the growth will slow down to 15-20% and the major risk would be high Oil price at $80
- expensive valuation. Assume the growth could be maintained from 2nd half and EPS for whole year is 0.26 per share. The expect PE is still 35x and PEG is 2 assuming 17% long term growth which is a overpricing in my point of view.
Income statement analysis
http://spreadsheets.google.com/pub?key=p
interim report
http://main.ednews.hk/listedco/listconews/sehk/20070911/LTN20070911248_C.pdf
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