Recently, HNA Holding (600221.SH) disclosed that its controlled subsidiary, HNA Tech, intends to acquire the outstanding 38.8% stake in Shenyang Beixiang Aviation Technology Co., Ltd. (hereinafter referred to as 'Beixiang Tech') from Northern Heavy Industries Group Co., Ltd. for a nominal RMB 1, and will fulfill the corresponding paid-in capital commitment of RMB 77.6 million. Beixiang Tech is primarily engaged in the provision of aircraft landing gear maintenance services. Upon completion of this transaction, HNA Tech's ownership stake in Beixiang Tech will increase to 89.8%.

Securities Star has observed that since 2025, HNA Holding has been actively engaged in capital operations, consistently reinforcing its aviation industry chain through mergers, acquisitions, and capital injections. Beyond its core aviation cargo operations, the company has also ventured into aviation ancillary businesses, including aircraft maintenance and aviation training. The company previously indicated that this strategic move is aimed at capitalizing on market opportunities presented by the operation of the Hainan Free Trade Port and exploring new avenues for profit generation. However, despite these frequent capital maneuvers, HNA Holding has continued to grapple with performance challenges since completing its restructuring at the end of 2021. From 2021 to 2024, the company has consistently reported losses in net profit after deducting non-recurring items. In the first three quarters of 2025, although the company witnessed significant profit growth, its gross profit margin stood at a mere 11.27%, indicating that the profitability of its core business still requires enhancement. Additionally, during the reporting period, the robust recovery of the international civil aviation market played a pivotal role in bolstering HNA Holding's performance. Nevertheless, the fourth quarter traditionally marks a slow season for this market, compounded by uncertainties such as geopolitical conflicts, posing challenges to HNA Holding's overall performance and its ability to achieve profitability in 2025.

01. Frequent Capital Operations in the Past Year

Recently, HNA Holding announced that its controlled subsidiary, HNA Tech, plans to acquire a 38.8% stake in Beixiang Tech from Northern Heavy Industries. Beixiang Tech is a joint venture established by HNA Tech and Northern Heavy Industries, with a registered capital of RMB 200 million. HNA Tech has subscribed for RMB 102 million in capital, holding a 51% stake, while Northern Heavy Industries has subscribed for RMB 98 million, holding a 49% stake. Prior to this equity transfer, Northern Heavy Industries had only contributed RMB 20.4 million in capital and now intends to divest its outstanding 38.8% stake.

Following negotiations between the two parties, the transaction price for the outstanding 38.8% stake in Beixiang Tech was set at RMB 1. HNA Tech is obligated to fulfill the paid-in capital commitment of RMB 77.6 million. Given that Northern Heavy Industries is under the same control as the listed company, this transaction constitutes a related-party transaction.

According to the announcement, Beixiang Tech was established in August 2023 and is primarily focused on providing aircraft landing gear maintenance services. As the controlling shareholder of Beixiang Tech, HNA Tech's acquisition of the shares is primarily aimed at expediting its maintenance capability development and business expansion. Upon completion of the transaction, HNA Tech's stake in Beixiang Tech will increase to 89.8%, while Northern Heavy Industries' stake will decrease to 10.2%.

It is noteworthy that Beixiang Tech is currently in the production preparation phase. In 2024 and the first three quarters of the preceding year, the company reported losses in net profit after deducting non-recurring items, amounting to RMB 4.6867 million and RMB 9.7825 million, respectively.

Securities Star noted that in its 2024 financial report, HNA Holding explicitly stated that with the operation of the Hainan Free Trade Port, the air transport industry is poised to embrace a "Double Opportunities" scenario of policy dividends and market expansion. As the primary base airline in Hainan, HNA Holding already has established enterprises engaged in aviation ancillary businesses, such as aircraft maintenance and engine repair. Looking ahead, the company aims to provide maintenance, ground support, and other ancillary services to global airlines transiting through the Free Trade Port, thereby diversifying its profit streams.

Against this backdrop, HNA Holding has been actively engaged in capital operations over the past year to continually enhance its aviation industry chain.

In November of the preceding year, HNA Holding invested RMB 799 million to acquire a 100% stake in Tianyu Flight Training, which is primarily engaged in pilot and flight attendant training. Market analysts believe that this move is expected to reduce HNA Holding's operating costs and pave the way for a new profit growth trajectory. In December of the preceding year, HNA Holding and non-related party Hainan Airport jointly increased their capital in HNA Tech, a controlled subsidiary primarily engaged in aircraft maintenance support services, in equal proportions. The total capital increase amounted to RMB 2.402 billion, with HNA Holding contributing RMB 1.635 billion. At that time, the company disclosed that the capital increase was primarily aimed at improving HNA Tech's financial health and providing financial support for its business expansion and production capacity enhancement.

Additionally, HNA Holding has also been ramping up its investments in its core aviation cargo business.

In December of the preceding year, HNA Holding announced its intention to invest RMB 750 million of its own funds to increase its capital in HNA Cargo, a related enterprise primarily engaged in aviation cargo and logistics-related businesses. Prior to this capital increase, HNA Holding did not hold any shares in HNA Cargo. Upon completion of the capital increase, the listed company's stake in HNA Cargo will increase to 16.2227%.

At that time, HNA Holding stated that the capital increase would facilitate enhanced coordination between the company and cargo agents and enable it to better capitalize on future growth opportunities in the aviation cargo market.

02. Core Business Profitability Still Requires Enhancement

Securities Star observed that despite HNA Holding's continuous efforts to improve its industry chain layout, the company still faces numerous performance challenges, more than four years after completing its restructuring.

HNA Holding went public in 1999, with its primary business being air passenger and cargo transportation. In 2017, three listed companies under the HNA Group encountered a debt crisis, leading HNA Holding down the path of bankruptcy restructuring. At the end of 2021, the company completed its restructuring, with Fangda Aviation becoming its controlling shareholder (later changed to Hanwei Investment under the same control), and Fang Wei becoming its actual controller.

Although the restructuring significantly alleviated HNA Holding's historical burdens, the company still grapples with substantial debt pressures. As of the end of the third quarter of 2025, HNA Holding's debt scale reached RMB 144.8 billion, with a debt ratio still at 96.8%. High debt levels have substantially increased the company's financial burden. In the first three quarters of the preceding year, HNA Holding's financial expenses amounted to RMB 2.228 billion, with interest expenses as high as RMB 3.096 billion, 1.05 times the company's operating profit.

As of the end of the third quarter of the preceding year, HNA Holding held a total of RMB 16.04 billion in cash and trading financial assets, while its short-term loans and non-current liabilities due within one year totaled RMB 17.23 billion. The company's working capital is no longer adequate to cover its short-term debts, thereby somewhat diminishing its operational flexibility.

In terms of its primary business, approximately 90% of HNA Holding's revenue is derived from air passenger transportation. At its peak in 2017, revenue from this business reached RMB 55.207 billion (accounting for 92.16% of total revenue), with a gross profit margin of 9.95%. However, in subsequent years, the business performance was continuously impacted by factors such as aviation fuel price fluctuations, RMB depreciation, debt crises, and the pandemic.

Post-pandemic, the domestic civil aviation market experienced a robust recovery, but the revival of international routes was relatively sluggish. On the other hand, competition in the domestic civil aviation market intensified significantly, coupled with the impact of high oil prices and exchange rate fluctuations, placing HNA Holding's business profitability under considerable pressure. In 2024, HNA Holding's air passenger transportation business generated revenue of RMB 58.267 billion, surpassing the 2017 level, but the gross profit margin of this business slipped to only 5.66%, nearly halving compared to 2017.

HNA Holding's other primary business, aviation cargo and excess baggage, has consistently accounted for a relatively small proportion of revenue and has also witnessed declining profitability in recent years. From 2017 to 2024, the gross profit margin of this business declined from 9.84% to 5.26%. In 2024, this business accounted for only 3.78% of total revenue.

In 2024, HNA Holding achieved revenue of RMB 65.24 billion, an 8.9% increase compared to 2017, but its overall gross profit margin was only 7.43%, significantly lower than the 13.54% in 2017.

Against this backdrop, HNA Holding's accelerated foray into the aviation ancillary business sector is viewed as a crucial measure to mitigate core business fluctuations and enhance the company's overall risk resilience. However, in the first half of 2025, the combined revenue contribution from this aspect of HNA Holding's business remained relatively modest, with a limited impact on the company's overall performance.

In the first three quarters of 2025, HNA Holding achieved revenue of RMB 53.44 billion, a 3.3% year-on-year increase; it reported a net profit attributable to shareholders of RMB 2.845 billion, a 30.93% year-on-year increase; and net profit after deducting non-recurring items was RMB 2.702 billion, a 44.43% year-on-year increase.

Securities Star noted that since 2025, the civil aviation market has continued to exhibit growth, with various indicators steadily improving, creating favorable conditions for HNA Holding's strong performance in the first three quarters of the preceding year. However, during the reporting period, the company's revenue and profit growth rates both slowed down significantly compared to the previous year. Additionally, although HNA Holding's gross profit margin has increased to 11.27%, it still lags significantly behind the 16.84% gross profit margin in the same period of 2017.

Furthermore, the robust recovery of the international civil aviation market played a significant role in boosting HNA Holding's performance during the reporting period. However, the fourth quarter traditionally marks a slow season for this market, compounded by factors such as geopolitical conflicts and international oil price fluctuations, which may exert pressure on the market's performance in the fourth quarter. Whether HNA Holding can achieve a profit turnaround for the full year of 2025 remains uncertain. (This article was first published on Securities Star, Author | Liu Haohao)

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