BOC AVIATION(02588.HK):AIRCRAFT LEASING TO BENEFIT FROM SUPPLY-DEMAND CYCLE AND FALLING INTEREST RATES
BOC AVIATION(02588.HK):AIRCRAFT LEASING TO BENEFIT FROM SUPPLY-DEMAND CYCLE AND FALLING INTEREST RATES
Action
行動
The Russia-Ukraine conflict and larger than expected interest rate hikes in the US disrupted the post-pandemic recovery of the aircraft leasing sector that should have started in 2022. However, BOC Aviation (BOCA) has started reversing impairment provisions for the aircraft in Russia, and the US Federal Reserve is pivoting towards rate cuts. Supply-demand imbalance is also intensifying along the airline industry chains. We thus anticipate a new growth cycle for aircraft leasing companies featuring valuation recovery, followed by rebounding aircraft value, and increasing aircraft delivery volume, as well as net lease yields.
俄羅斯與烏克蘭的衝突以及美國的加息幅度超出預期，打亂了本應在2022年開始的飛機租賃業在疫情後的復甦。但是，中銀航空租賃（BOCA）已開始撤銷對俄羅斯飛機的減值規定，美聯儲正在轉向降息。航空產業鏈上的供需失衡也在加劇。因此，我們預計，飛機租賃公司將進入一個新的增長週期，其特點是估值回升，隨後飛機價值將反彈，飛機交付量增加，淨租賃收益率也將增加。
Reasoning
推理
Sector fundamentals: Continuous recovery in demand, and further tightening in supply; US Treasury yields to decline from peak.
行業基本面：需求持續復甦，供應進一步緊縮；美國國債收益率將從峯值下降。
Demand: According to the International Air Transport Association (IATA), the revenue passenger kilometers (RPK) of the global airline industry in October 2023 reached 98% of the level in October 2019, and continued to recover. In addition, the passenger load factor (PLF) exceeded the level of 2019. While international flights still weighed on RPK in the Asia Pacific region, the RPK in North America, Europe, and the Middle East has reached 106-107% of the levels in 2019.
需求：根據國際航空運輸協會（IATA）的數據，2023年10月，全球航空業的收入客運公里數（RPK）達到2019年10月的98％，並繼續復甦。此外，載客係數（PLF）超過了2019年的水平。儘管國際航班仍然對亞太地區的RPK造成壓力，但北美、歐洲和中東的RPK在2019年已達到該水平的106-107％。
Supply: Boeing and Airbus still suffer from delays in aircraft delivery. The IATA estimates 2023 aircraft delivery volume at 1,372 units, 441 units lower compared with 2018. In addition, due to Pratt & Whitney's engine problems, a large number of A320 and A321 aircraft will likely be grounded for maintenance. Pratt & Whitney estimates about 650 aircraft will likely be grounded at one point in 2024, accounting for about 22% of the total fleet of A320Neo. This may further increase supply-side pressure, in our view.
供應：波音和空中客車公司仍面臨飛機交付延誤的問題。國際航空運輸協會估計，2023年的飛機交付量爲1,372架，與2018年相比減少了441架。此外，由於普惠公司的發動機問題，大量的A320和A321飛機可能會停飛進行維護。普惠公司估計，2024年的某一時刻可能會有大約650架飛機停飛，約佔A320Neo機隊總數的22％。我們認爲，這可能會進一步增加供應方面的壓力。
Interest rates: The financing cost of aircraft leasing companies rose rapidly in the past two years due to larger than expected interest rate hikes in the US, weighing on their net lease yields. However, the US Federal Reserve is likely to pivot towards rate cuts in 2024, boding well for mitigating the cost pressure of aircraft leasing companies.
利率：由於美國的加息幅度超過預期，飛機租賃公司的融資成本在過去兩年中迅速上升，打壓了它們的淨租賃收益率。但是，美聯儲可能會在2024年轉向降息，這對於緩解飛機租賃公司的成本壓力是個好兆頭。
Corporate operations: Order book and financial leasing to support fleet expansion; net lease yields likely to bottom out and rebound in 2H23, and sales of aircraft likely to offer continuous earnings boost.
企業運營：訂單簿和融資租賃以支持機隊擴張；淨租賃收益率可能會在下半年觸底反彈，飛機的銷售可能會持續提振收益。
Growth: We expect new financial leasing contracts to relieve the pressure on growth from delayed delivery of aircraft in the near term. In addition, BOCA's order book of 233 state-of-the-art aircraft should support fleet expansion in the long term, in our view.
增長：我們預計，新的融資租賃合同將在短期內緩解飛機延遲交付對增長的壓力。此外，我們認爲，從長遠來看，博卡的233架最先進飛機的訂單應該支持機隊的擴張。
Net lease yields: We think net lease yields will likely begin trending upwards in 2024, as supply-demand dynamics enhance lease rental yields and financing interest rates start to decline.
淨租賃收益率：我們認爲，隨着供需動態提高租賃租金收益率以及融資利率開始下降，淨租賃收益率可能會在2024年開始呈上升趨勢。
Asset quality: We believe aircraft value may boost the earnings growth potential of aircraft leasing companies, and is also a leading indicator for supporting valuation recovery. As of 1H23, the market value of BOCA's fleet was 5% higher than its book value; after considering debt ratios, the P/B value of its fleet was 1.2x, which was still lagging behind market price trends. BOCA sold 32 aircraft annually over 2016-2019 with average investment returns of 9%. Looking ahead, the regular sale of aircraft should offer a continuous earnings boost, in our view.
資產質量：我們認爲，飛機價值可能會提振飛機租賃公司的收益增長潛力，也是支持估值回升的主要指標。截至上半年，博卡機隊的市值比其賬面價值高出5％；考慮到負債比率，其機隊的市盈率爲1.2倍，仍落後於市場價格趨勢。博卡在2016-2019年期間每年售出32架飛機，平均投資回報率爲9％。展望未來，我們認爲，定期銷售飛機應該會持續增加收益。
Peer comparison: The valuation of AerCap has recovered to 1.0x 2023e P/B driven by the materialization of aircraft value. Before the pandemic, BOCA enjoyed the highest 2019a daily average P/B (LYR) of 1.4x among three comparable companies, followed by 0.87x for Air Lease Corporation and 0.86x for AerCap. However, AerCap has the highest 2023e P/B of 1.0x at present, followed by 0.95x for BOCA and 0.6x for Air Lease Corporation.
同行比較：在飛機價值實現的推動下，AerCap的估值已恢復至2023年市盈率的1.0倍。在疫情之前，博卡是2019年三家同類公司中最高的每日平均市盈率（LYR），爲1.4倍，其次是空中租賃公司的0.87倍，AerCap的0.86倍。但是，AerCap目前的2023年市盈率最高，爲1.0倍，其次是博卡的0.95倍，空中租賃公司的市盈率爲0.6倍。
We think AerCap's valuations have recovered ahead of its peers, as the sales of aircraft facilitated its share buyback. In our view, BOCA boasts a high-quality fleet and order quality, leading operations, and solid shareholder returns, conducive to enhancing its earnings and valuations in the upcoming new cycle.
我們認爲，由於飛機的銷售促進了其股票回購，AerCap的估值已領先於同行。我們認爲，博卡擁有高質量的機隊和訂單質量、領先的運營和穩健的股東回報，有利於在即將到來的新週期中提高其收益和估值。
Financials and valuation
財務和估值
We raise 2023 earnings forecast 26% to US$757mn, as BOCA has recently received US$208mn cash payment under an insurance settlement for its aircraft in Russia, and we change our assumptions for interest rates. We largely keep our 2024 earnings forecast unchanged. We maintain OUTPERFORM and TP at HK$81.4, implying 1.2x 2024e P/B and 36% upside.
我們將2023年的收益預期提高26％，至7.57億美元，因爲BOCA最近根據其在俄羅斯飛機的保險和解協議收到了2.08億美元的現金付款，並且我們改變了對利率的假設。我們在很大程度上保持2024年的收益預測不變。我們將跑贏大盤和目標價維持在81.4港元，這意味着市盈率爲2024年的1.2倍，上漲幅度爲36％。
Risks
風險
Decline of interest rates missing expectation; geopolitics; unexpected delay in aircraft delivery; demand recovery missing expectation.
利率下降未達到預期；地緣政治；飛機交付意外延遲；需求復甦未達到預期。
譯文內容由第三人軟體翻譯。