BOC AVIATION(02588) HTSC·2025-01-10 07:55Investment Rating - The investment rating for the company is "Buy" [7]. Core Views - The company faced challenges in aircraft deliveries due to upstream manufacturers' capacity constraints, resulting in a year-over-year decrease of 26 aircraft delivered in 4Q24. The total number of owned aircraft slightly increased to 435 [2][3]. - The company is exploring engine business opportunities, having acquired 10 engines by the end of 4Q24, which is expected to help mitigate capital expenditure gaps caused by aircraft delivery issues [2][3]. - The anticipated core ROE for 2024 is expected to remain roughly in line with 2023 levels, despite potential pressure from rising funding costs due to the Federal Reserve's interest rate policies [4]. Summary by Sections Aircraft Delivery and Operations - In 4Q24, the company executed 77 transactions, including the delivery of 13 aircraft and commitments to purchase 14 aircraft and 4 engines. The total aircraft delivered in 2024 was 38, falling short of the mid-term target of 55 due to manufacturing capacity issues and a Boeing worker strike [3]. - The owned aircraft utilization rate remained stable at 99%, with an average fleet age of 5.0 years and an average remaining lease term of 7.9 years [3]. Financial Projections - Revenue and other income are projected to be 749.89 million, a slight decrease of 1.83% [6]. - The company’s target price has been adjusted to HKD 78, based on a projected PB of 1.04x for 2025 and a BVPS of USD 9.65 [5][12]. Market Conditions - The demand for air travel continues to recover, with global RPK increasing by 8.1% year-over-year in November. This recovery is expected to drive growth in aircraft leasing demand [4]. - The company’s stock is currently trading at 0.82x 2025E PB and offers a dividend yield of 4.4% [5][8].