BOC AVIATION(HK:02588) Ge Long Hui·2025-12-26 12:59Core Conclusion - In 2016, China Aircraft Leasing Group Holdings Limited (CALC) was listed on the Hong Kong Stock Exchange. As a leading player in the aircraft leasing industry, the company is expected to benefit from both the rising aviation industry and the Federal Reserve's interest rate cuts. CALC owns 483 aircraft, ranking fifth among global aircraft leasing companies, and is projected to see revenue growth from its global airline customer base as the aviation market improves. Additionally, with the ongoing interest rate cuts by the Federal Reserve, the company's USD-denominated funding costs are expected to decrease, leading to an expansion of interest margins, resulting in a dual benefit for the company. The company is favored for its young fleet and long-term leases, which provide asset stability, and the anticipated decline in debt costs is expected to widen interest spreads. A "Buy" rating is assigned for the first coverage [1]. Industry Outlook - The aviation industry's recovery is driving an increase in aircraft rental prices due to supply shortages. The global aviation market saw a sharp decline in 2020 due to the pandemic, but it began to recover in 2021, with a strong rebound expected post-2023. By the first half of 2025, global Available Seat Kilometers (ASK) are projected to return to pre-pandemic levels, with stable demand in the aviation market. In 2024, Boeing is expected to underdeliver due to safety incidents, regulatory tightening, and labor strikes, leading to a global aircraft supply shortage. Rental prices for mainstream narrow-body Airbus A320 and wide-body Boeing 737 aircraft are showing a steady upward trend and are expected to continue this trajectory in the future [1]. Competitive Advantage - CALC's core competitiveness lies in its young fleet and long-term leases, which provide cost and liquidity advantages compared to Bohai Leasing and China Aircraft Leasing. The company's fleet size is continuously increasing, and its financing lease scale is growing rapidly. The company's liabilities are primarily USD-denominated, and it dynamically adjusts the duration and structure of its liabilities in response to interest rate changes. With the anticipated continuation of Federal Reserve interest rate cuts, the cost of liabilities is expected to decrease [2]. Financial Projections - CALC's total operating revenue is projected to be USD 2.634 billion, USD 2.854 billion, and USD 2.939 billion for the years 2025 to 2027, reflecting year-on-year growth of +3.0%, +8.4%, and +3.0% respectively. The net profit attributable to the parent company is expected to be USD 761 million, USD 894 million, and USD 964 million for the same years, with year-on-year changes of -17.6%, +17.4%, and +7.8%. Corresponding earnings per share (EPS) are projected to be HKD 8.53, HKD 10.01, and HKD 10.80, while book value per share (BPS) is expected to be HKD 76.70, HKD 83.21, and HKD 90.23, with return on equity (ROE) levels of 11.53%, 12.53%, and 12.45% respectively [2].