BOC AVIATION(HK:02588) Guotai Junan Securities·2024-05-29 03:31Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of HKD 79.94, corresponding to a 2024 P/B of 1.14x [3][4]. Core Views - The report highlights that the improvement in performance is driven by both asset and liability sides, with expectations of revenue growth from increased leasing rates and reduced financing costs due to anticipated interest rate declines [3][25]. - The demand for air transport is recovering, leading to an expected increase in leasing rates, while the company's financing costs are projected to decrease as global interest rates decline [3][36]. Summary by Sections 1. Company Overview - The report identifies the company as one of the largest aircraft operating leasing firms globally, with a strong management team and a focus on operational leasing, which alleviates cash flow pressures for airlines [9][19]. - The company has shown resilience and recovery in performance post-pandemic, with a significant rebound in 2023 [25][22]. 2. Supply and Demand Dynamics - The report notes a mismatch in supply and demand, with strong aircraft demand driving rental yield increases, while financing costs are expected to decline due to lower interest rates [3][38]. - The aircraft manufacturing capacity is limited, primarily relying on Boeing and Airbus, which affects the supply of new aircraft to meet rising demand [38]. 3. Financial Projections - Revenue forecasts for 2024-2026 are projected at USD 2.533 billion, USD 2.697 billion, and USD 2.835 billion, reflecting year-on-year growth rates of 2.9%, 6.5%, and 5.1% respectively [3][7]. - Net profit estimates for the same period are USD 783 million, USD 892 million, and USD 991 million, with growth rates of 2.5%, 13.9%, and 11.2% respectively [3][7]. 4. Revenue Composition - In 2023, the company achieved rental income of USD 1.911 billion, accounting for 77.6% of total revenue, with a year-on-year growth of 7.1% [27][29]. - The increase in rental income is attributed to the growth in the number of aircraft in the operating lease fleet and improved rental yield [27][29].