BOC AVIATION(HK:02588) Zhi Tong Cai Jing·2025-08-22 02:15Core Viewpoint - The report maintains the profit forecast for China Aircraft Leasing Group (02588) and sets a target price of HKD 81.40, indicating a 13% upside potential based on projected P/B ratios for 2025 and 2026 [1] Group 1: Financial Performance - In 1H25, the company's revenue increased by 6% year-on-year to USD 1.24 billion, while net profit decreased by 26% to USD 342 million, primarily due to the one-time impact of recovering two Russian aircraft [1] - Excluding this impact, the core net profit increased by 20% year-on-year, aligning with expectations [1] Group 2: Operational Metrics - The company delivered a total of 24 aircraft in 1H25, an increase of 6 aircraft year-on-year and 4 aircraft quarter-on-quarter, with capital expenditures reaching a near five-year high of USD 1.9 billion, up 138% year-on-year [2] - The operating lease fleet's net book value increased by 1% to USD 18.2 billion, while the total fleet size rose by 2% to USD 22.2 billion [2] - The rental yield improved, with new high-value aircraft contributing to a rental factor increase of 0.5 percentage points year-on-year to 10.3% [2] Group 3: Growth Potential - The company signed its largest aircraft order in history during 1H25, with the order book increasing by 132 aircraft year-on-year to 351 aircraft, corresponding to a capital expenditure of approximately USD 20 billion [3] - The fleet maintained a 100% utilization rate with an average age of 5 years and an average remaining lease term of 7.9 years, indicating a robust and predictable rental income structure [3] Group 4: Financing Costs - The company's funding cost remained stable at 4.6% year-on-year, with total debt increasing by 2% [4] - The company is expected to benefit from potential reductions in short-term interest rates, particularly for its 32% floating-rate debt, which is the highest among listed leasing companies [4]