Bank of America Securities: Initial Bank of China Airlines Leasing (02588) “Buy” Rating Target Price HK$80

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it covered BOC Aviation Leasing (02588) for the first time and gave it a “buy” rating. The target price was HK$80, which was valued at 0.9 times the expected book value per share in 2027, and the potential total return for dividends is about 17%. The bank pointed out that as the largest aircraft leasing company in Asia, BOC Aviation Leasing is expected to benefit from the structural resilience of global air travel demand and tight aircraft supply.

Bank of America Securities believes that the aging of the fleet, combined with continued restrictions on the supply of original aircraft and engines, will help maintain high leasing rates and used aircraft values for a longer period of time. The company has a high-quality fleet, steady execution, continuous expansion of orders, and is supported by the Bank of China Group's strong financing capabilities, and is expected to benefit from good industry prospects.

The bank expects BOC Aviation Leasing's earnings per share to increase by 5.3%, 7.2% and 11.5% year-on-year respectively in 2026, 2027 and 2028, with a forward dividend ratio of 5.2%, and a net market ratio of about 0.8 times, making the valuation attractive. The company currently has 322 aircraft on order, and the annual capital expenditure is estimated to be around US$3.5 billion to US$4.5 billion by 2029.

In terms of dividends, the bank expects the company to pay out $0.478 per share in 2026, which is equivalent to a forward dividend rate of 5.2%. Risks include higher-than-expected debt costs, long-term high aviation fuel prices and deteriorating financing conditions for airline customers, lower-than-expected returns from aircraft transactions, and appreciation of the US dollar.