Li Ka-Shing Buys 9.74% of AVIC International for HK$270 Million

Li Ka-Shing Buys 9.74% of AVIC International for HK$270 Million

Li Ka-shing bought a stake in a unit of Chinese planemaker Aviation Industry Corp. of China for HK$270 million ($35 million) as Hong Kong’s richest man increases his bet on aviation.

Li bought 450 million shares in AVIC International Holding Ltd. (232) at HK$0.60 apiece, according to a filing to the Hong Kong stock exchange today. The purchase gave Li 9.74 percent stake in the company, according to the filing.

Last month, Li’s Cheung Kong Holdings Ltd. agreed to pay $1.89 billion to buy 45 planes from companies including General Electric Co. (GE)’s aviation services unit to enter aircraft leasing. Li is entering the plane-leasing market as increasing urbanization and a growing middle class fuel a surge in travel demand across the world’s most populous continent.

http://www.bloomberg.com/news/2014-12-22...llion.html

I wonder what Superman Li sees in the aircraft leasing business to be buying into all these planes

(23-12-2014, 09:56 AM)yawnyawn Wrote: Li Ka-Shing Buys 9.74% of AVIC International for HK$270 Million

Li Ka-shing bought a stake in a unit of Chinese planemaker Aviation Industry Corp. of China for HK$270 million ($35 million) as Hong Kong’s richest man increases his bet on aviation.

Li bought 450 million shares in AVIC International Holding Ltd. (232) at HK$0.60 apiece, according to a filing to the Hong Kong stock exchange today. The purchase gave Li 9.74 percent stake in the company, according to the filing.

Last month, Li’s Cheung Kong Holdings Ltd. agreed to pay $1.89 billion to buy 45 planes from companies including General Electric Co. (GE)’s aviation services unit to enter aircraft leasing. Li is entering the plane-leasing market as increasing urbanization and a growing middle class fuel a surge in travel demand across the world’s most populous continent.

http://www.bloomberg.com/news/2014-12-22...llion.html

I wonder what Superman Li sees in the aircraft leasing business to be buying into all these planes

Aircraft leasing business is interesting. Warren Buffett also in this business, with its NetJets. I am yet to explore further, but should be an interesting business model.

http://jetzaviation.com/jetz_blog/tag/warren-buffett/

AVIC structure seems complicated... there's even AVIC International Maritime listed here... and also AVIC International Holdings (161 HK) AVIC Joy Holdings (260 HK)

AVIC International (232 HK) has zero sales in the aero-tech division in 1H14, with main bulk of revenue from Knitting/ Textile and Trading of raw materials and components. Too complex for me

The one that analysts follow closer is AVIChina Industry

AVIC Intl HK is an ongoing RTO if I remember correctly..

Aircraft leasing is interesting since it is a viable model for airlines to adopt as it free up cash flow. I think aircraft leasing lies in a sweet spot where airlines would remain to be a necessary sector yet they don't suffer from the same issues an airline suffer from.

How the leasing model is being structured would be important. In other words, can this business be self-funded?

There are large air leasing companies listed in NYSE:

FLY Leasing - US$3.5 billion fleet book value
Aircastle - US$5.1 billion fleet book value
Air Lease Corp - US$8.9 billion fleet book value

(Not Vested)