Investment Rating - The report assigns a "Buy" rating to Bohai Leasing (000415.SZ) with a target price of 4.39 CNY, marking the first coverage of the stock [4]. Core Views - The company is focusing on its core aircraft leasing business after divesting its container leasing assets, which is expected to lead to a revaluation of its asset value [1][39]. - Bohai Leasing has become the second-largest aircraft leasing company globally, with a significant advantage in aircraft orders, primarily for A320NEO and Boeing 737MAX models, aligning with market trends [1][44]. - The ongoing supply-demand gap in the aircraft market is expected to maintain high aircraft values and rental rates, benefiting the company's financial performance [2][3]. Summary by Sections Section 1: Focus on Aircraft Leasing - Bohai Leasing announced plans to sell its container assets in May 2025, allowing it to concentrate on its aircraft leasing business [1]. - The company’s aircraft leasing revenue has been improving, with aircraft leasing and sales accounting for approximately 80% of total revenue [24]. - The company’s aircraft leasing gross margin has been steadily increasing, reaching 61.5% in 2024 [30]. Section 2: Order Aircraft Advantage - As of Q1 2025, Avolon, a subsidiary of Bohai Leasing, operates a fleet of 1,096 aircraft, making it the second-largest aircraft leasing company globally [44]. - The average age of the fleet has increased to 6.7 years, with a stable remaining lease term of around 6.7 years [40]. - The company has a high fleet utilization rate, achieving 100% in 2024, with all new aircraft deliveries for 2025 and 2026 already leased [50]. Section 3: Aircraft Supply-Demand Gap - Aircraft manufacturers are facing significant production constraints, leading to longer delivery times, with the average delivery time reaching a record 5.3 years in 2024 [70]. - The rental rates for new aircraft have surpassed pre-pandemic levels, driven by the ongoing supply-demand gap [77]. - The global aviation market continues to show growth, with international passenger demand improving significantly, particularly in the Asia-Pacific region [86].

Core Viewpoint - 中银航空租赁（BOCA） reported a slight increase in aircraft deliveries in 2Q25, with a total of 13 aircraft delivered compared to 11 in 1Q25, while the total number of owned aircraft decreased to 441 due to the sale of 14 aircraft [1][2] Group 1: Operational Performance - In 2Q25, BOCA executed 75 transactions, including the delivery of 13 aircraft and the sale of 14 aircraft, resulting in a net decrease of 1 owned aircraft [2] - The company maintains a strong order book with 351 aircraft on order, supporting long-term growth despite a decrease in owned aircraft [2] - The utilization rate of the fleet remains stable at 100%, with an average remaining lease term of 7.9 years [2] Group 2: Market Conditions - The recovery of upstream aircraft manufacturers' production capacity is a positive signal, with Boeing and Airbus delivering a total of 320 aircraft in 2Q25, up from 266 in 1Q25 [1] - Despite improvements in aircraft supply, demand for air travel continues to rise, with global revenue passenger kilometers (RPK) increasing by 5% year-on-year in May, indicating ongoing pressure on aircraft availability and rental rates [2] Group 3: Financial Outlook - The company expects a core ROE of 10.6% for 2025, roughly in line with 10.5% in 2024, reflecting stable operational performance [1][2] - Profit forecasts for 2025, 2026, and 2027 are maintained at USD 700 million, USD 790 million, and USD 800 million respectively, with a target price of HKD 82 based on a price-to-book ratio of 1.06x for 2025 [3]

Financial Data and Key Metrics Changes - The company reported GAAP net income of $643 million and earnings per share (EPS) of $3.48 for Q1 2025, with adjusted net income of $679 million and adjusted EPS of $3.68, leading to an increase in full-year EPS guidance [5][13][18] - The net maintenance contribution was $82 million, significantly higher than the average of $30 million to $40 million due to lower leasing expenses [14] - The net gain on sale of assets was $177 million, with total sales revenue of $683 million, resulting in a 35% unlevered gain on sale margin [14] - The liquidity position was strong, with total sources of liquidity at approximately $20 billion, including over $1 billion in cash [16][17] Business Line Data and Key Metrics Changes - The company achieved a 99% utilization rate and an 84% extension rate during the period, indicating strong operational performance [5] - On the passenger side, there was strong demand for 787 aircraft, with successful transitions and increased rents [6][7] - The company executed a $7.87 million sale leaseback at attractive pricing with a new customer, highlighting the demand for its assets [8] - The company ordered 268 new LEAP engines in 2024, with over 120 already delivered, showcasing a focus on expanding operational capacity [9][10] Market Data and Key Metrics Changes - The company noted that the U.S. market represents only about 22% of the global market, emphasizing the importance of international markets [52][69] - There is a significant tailwind against falling yields in non-U.S. dollar denominated economies, insulating them from slowdowns [52] Company Strategy and Development Direction - The company announced a new $500 million share repurchase program, reflecting confidence in its financial position [5][18] - The management emphasized a long-term mindset in fleet management, contrasting short-term airline capacity adjustments with long-term fleet decisions [53] - The company is focused on profitability and risk-adjusted returns, indicating a disciplined approach to capital deployment [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in robust demand for the foreseeable future, despite macroeconomic uncertainties [11][19] - The company is seeing opportunities in the helicopter business and is adapting to changes in the leasing model [10][11] - Management acknowledged potential impacts from tariffs but noted that current contracts have fixed caps on escalation [42][43] Other Important Information - The company was upgraded to BBB+ by Fitch, indicating a strong credit rating across all three rating agencies [17] - The company has taken advantage of market volatility to repurchase over $1 billion worth of stock so far this year [20] Q&A Session Summary Question: Expectations for bilateral transactions in light of tariff uncertainty - Management expects to see more bilateral negotiations due to the company's scale and global reach [22][23] Question: Impact of freight conversion delays on EPS guidance - The increase in EPS guidance was primarily driven by gains on sale and higher net maintenance contributions, despite some delays in the freighter conversion program [24][26][28] Question: Deployment of excess capital in engines and helicopters - Management indicated ample capital availability for attractive opportunities, with potential deployment in the range of billions [32][33] Question: Indicators of demand trends going forward - Management noted that while U.S. airlines are adjusting capacity, long-term fleet decisions remain strong, and no reduction in demand is currently observed [51][55] Question: Composition of aircraft buyers - Recent sales were approximately a quarter to airlines, a third to other lessors, and a third to investors, with minimal part-out sales [72] Question: Future of tariffs and their impact on lessors - Management discussed the importance of ensuring that tariffs do not restrict the used aircraft market, which could negatively impact consumers [75][78] Question: Demand for wide-body aircraft - Management reported strong and unabated demand for wide-body aircraft, with a focus on 787 and A350 models [104][105] Question: Lobbying efforts regarding tariffs - Management confirmed that there is active lobbying in the aerospace industry to protect and grow U.S. manufacturing [109][111]

Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for its stock performance in the near term [5]. Core Views - The company is identified as a leading player in the aircraft leasing sector, with expected performance improvements in the current economic cycle [5]. - The report highlights strong growth in aircraft sales and an increase in rental yield, driven by rising aircraft market prices and strategic asset management [7]. - The company is projected to benefit from a tightening aircraft supply, leading to increased rental income and improved profit margins [7]. Financial Summary - Revenue projections for the company show a significant increase from 33,675 million RMB in 2023 to 47,621 million RMB in 2025, reflecting a compound annual growth rate (CAGR) of 23.91% [6]. - The net profit attributable to shareholders is expected to rise from 1,281 million RMB in 2023 to 1,913 million RMB in 2025, with a notable growth rate of 111.58% in 2025 [6]. - The earnings per share (EPS) is forecasted to increase from 0.21 RMB in 2023 to 0.31 RMB in 2025, indicating a positive trend in profitability [6]. Business Overview - The company has rapidly expanded through acquisitions and focuses on operational leasing, with aircraft and container leasing as its primary business segments [7]. - By the end of 2024, the company is expected to have a fleet of 1,158 aircraft, maintaining a 100% rental rate, which positions it as the second-largest aircraft leasing company globally [7]. - The company is exploring innovative business opportunities in emerging fields such as eVTOL, CTOL, and hydrogen aviation, aiming to diversify its growth avenues [7].