Core views:
According to the company's report for the first quarter of 2024, the 24Q1 company achieved 8.566 billion yuan, a year-on-year increase of 31.58%, and achieved net profit of 389 million yuan, an increase of 58.21% over the previous year, after deducting net profit of 214 million yuan, an increase of 215.29% over the previous year.
Increase aircraft sales, boost performance flexibility, and optimize asset allocation. (1) As of 24Q1, Avolon, the company's aircraft leasing subsidiary, had delivered a total of 9 new aircraft (23Q1 was 9); completed 9 aircraft sales (23Q1 was 2) and signed 17 aircraft sales letters of intent (23Q1 was 13). The increase in aircraft sales is helping to dispose of low-yield assets and optimize asset allocation at today's high prices, when the market value of aircraft continues to rise, and secondly, to dispose of low-yield assets and optimize asset allocation. According to the company's financial report, net cash obtained from disposal of fixed assets in 24Q1 was 2,388 billion yuan, a significant increase over 652 million yuan in the same period last year. (2) As of 24Q1, Avolon's fleet was 1,033, including 534 owned aircraft, 43 managed aircraft, and 456 ordered aircraft, serving 145 airline customers in 64 countries around the world. Aircraft orders rank first in the world. As new aircraft are delivered one after another, the company's own fleet will be transformed in an orderly manner to rejuvenation and energy efficiency.
Core metrics improved. (1) Annualized ROE gradually picked up, growing from 3.56% in 23Q1 to 5.20% in 24Q1, which indicates to a certain extent that operating capacity has improved. (2) Simply based on the average financial fee/debt, the average cost of debt in 24Q1 increased slightly compared to 23, and the total debt narrowed. The balance ratio fell from 83.28% in 23Q1 to 82.20% in 24Q1. (3) The container leasing industry has gradually declined and normalized since 22Q3. Rent levels and sales prices have fallen from previous historical highs to a long-term equilibrium range and have remained relatively stable.
Profit forecasting and investment advice. Revenue is estimated at $36.052 billion for 24. Considering the narrowing of asset and credit impairment, net profit attributable to mother is estimated to be $1,569 billion in 24, respectively, up 22.4% from the same period. Referring to the industry's 24-year PB valuation average value is about 0.7x. Considering the company's “dilemma relief,” the valuation center is expected to rise. A reasonable valuation of 0.7 x PB for 24 is based on the 2024 BVPS of 5.1 yuan, which corresponds to a reasonable value of 3.57 yuan/share, giving an “increase in holdings” rating.
Risk warning. Interest rates are rising, financial expenses are increasing, supply delays, and pressure to roll over debt repayment, etc.