Bohai Leasing(SZ:000415) GF SECURITIES·2024-09-17 06:39Investment Rating - The report assigns a "Buy" rating to Bohai Leasing, with a target price of 3.61 CNY per share, compared to the current price of 2.10 CNY [3][12]. Core Insights - Bohai Leasing's subsidiary Avolon plans to acquire 100% of Castlelake Aviation Limited (CAL) for a total price of 1.2 billion USD, which is below the book value of the assets [1][5]. - The acquisition is seen as a strategic move to enhance asset quality and expand Avolon's fleet, which will increase its total aircraft to 1,147, including 647 owned and 40 managed aircraft [5][6]. - The deal is expected to close in Q1 2025, and it will not affect Avolon's current credit rating according to Fitch Ratings [2][6]. Summary by Sections Acquisition Details - The acquisition price is set at 0.98 times book value, amounting to approximately 12.21 billion CNY [5][6]. - CAL has a fleet of 107 owned aircraft with an average age of 4.7 years, and a high proportion of narrow-body aircraft at 68% [2][8]. Financial Projections - For 2024, the expected revenue is 36.405 billion CNY, with a net profit forecast of 1.657 billion CNY, representing a year-on-year growth of 29.3% [10][11]. - The report anticipates a continued increase in rental income due to a favorable market environment and the acquisition's impact on asset yield [10][11]. Market Context - The report highlights a trend of consolidation in the aircraft leasing industry, with major players engaging in acquisitions to bolster their market positions amid declining OEM deliveries [6][8]. - The report notes that Avolon's debt-to-asset ratio is lower than its peers, which positions it well for the acquisition [5][6].