I added a few shares in BCIA (HK:694) to the portfolio this afternoon. At first glance, BCIA is not the sort of stock I would be interested in - it has high levels of debt (much of which falls due in 2015, 2016 and 2017), a modest ROE, is selling at a trailing PE of 25x and had a patchy record of paying dividends.
However, it is starting to show signs of being a major beneficiary of China's growing demand for air travel and I expect that revenues (from all sources) will continue to rise for some time. Simply doubling the interim result suggests a 2011 PE of around 15 and a return to paying dividends on a regular basis (although at very modest levels initially). Essentially I am betting on BCIA being able to grow its revenues for a number of years. The nature of the asset and its monopolistic status give me some comfort on the gearing.
In terms of personal experience, given that delays in arrival and departure times are routine, I would expect that BCIA will need to spend some money on expanding capacity to meet rising demand at some stage. The potential for future CAPEX and the maturity profile of the existing debt are my two main concerns.
I paid HK$4.27 per share.