BOC AVIATION(HK:02588) Guotai Junan Securities·2024-08-16 07:38Investment Rating - The report maintains a rating of "Buy" for Bank of China Aviation Leasing, with a target price raised to HKD 87.13, corresponding to a 1.24x P/B for 2024 [6]. Core Insights - The company's net profit for the first half of 2024 increased by 75.57% year-on-year, exceeding market expectations, driven by strong demand leading to increased financing leasing income, aircraft sales revenue, and aircraft impairment reversals. The anticipated interest rate cuts are expected to further improve cost of debt [3][6]. Summary by Sections Financial Performance - For the first half of 2024, the company achieved revenue of USD 1.174 billion, a year-on-year increase of 10.65%. The net profit attributable to shareholders was USD 460 million, reflecting a 75.57% increase year-on-year, primarily due to aircraft impairment reversals, growth in financing leasing interest income, and increased net aircraft sales revenue [6]. - The company declared an interim dividend of USD 0.1988 per share, a 76% increase year-on-year, maintaining a stable payout ratio of 30% [6]. Revenue Breakdown - The operating leasing revenue was USD 928 million, remaining stable, while financing leasing revenue surged to USD 96 million, a year-on-year increase of 379.5%. This growth is attributed to the stable increase in air transport passenger volume and insufficient new aircraft deliveries on the supply side, driving strong demand for financing leasing [6]. Cost Management - The company's costs and expenses amounted to USD 665 million, a decrease of 13.1% year-on-year, mainly due to a net aircraft impairment reversal of USD 170 million. The combination of revenue growth and cost improvement drove the significant increase in net profit for the first half of 2024 [6]. Market Position and Outlook - The company delivered 18 new aircraft in the first half of 2024, compared to 15 in the same period of 2023, and sold 15 aircraft, up from 3 in the previous year. The tight supply of aircraft in the industry has led to increased demand and rising aircraft values [6]. - The company benefits from diversified financing channels and is expected to see further improvements in funding costs due to the anticipated interest rate cuts by the Federal Reserve [6].