Morningstar

BOC Aviation Ltd Shs Unitary 144A/Reg S 02588

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Stock XHKG Rating as of
HK$64.45 +1.45 (2.30%)
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As of Delayed Price Closed

Company Report

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BOC Aviation to Benefit From Easing Interest Rates; Aircraft Delivery Delays Still a Drag

Lorraine Tan

BOC Aviation’s role as an aircraft leasing firm is mainly to provide liquidity to global airlines, either through operating leases or financing arrangements, in their access to aircraft. Rather than lock up their capital in fixed assets, airlines increasingly opt to lease aircraft. Based on data from Ascend Analytics and BOC Aviation, the proportion of the global airline fleet on operating leases has risen to 52% in 2023 from 23% in 1990. We expect BOC Aviation’s market share to be stable, so its volume of leases should at least track global commercial fleet growth of about a 2.9% compound annual growth rate through 2033, based on Oliver Wyman data.

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Price vs Fair Value

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02588 is trading at a 219% premium.
Price
HK$64.45
Fair Value
HK$75.00
Uncertainty
Medium
1-Star Price
HK$757.90
5-Star Price
HK$14.40
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

BOC Aviation has demonstrated superior aircraft portfolio management skills in the past, and we expect it to keep its fleet both highly desired and fuel-efficient, allowing it to charge higher lease factor rates and consequently deliver higher margins than its international peers.

Bears

BOC Aviation struggles to keep the aircraft portfolio consisting of the most-wanted and fuel-efficient models. Hence, its premium on the lease factor rate tends to be driven to the minimum.

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Trading Information

Previous Close Price
HK$63.00
Day Range
HK$62.50–64.45
52-Week Range
HK$47.15–70.25
Bid/Ask
HK$64.45 / HK$64.50
Market Cap
HK$44.73 Bil
Volume/Avg
795,849 / 833,585

Key Statistics

Price/Earnings (Normalized)
7.83
Price/Sales
2.63
Dividend Yield (Trailing)
5.70%
Dividend Yield (Forward)
5.70%
Total Yield
5.70%

Company Profile

BOC Aviation is the world’s fifth-largest aircraft leasing company by net book value of owned aircraft, with a portfolio of more than 600 commercial passenger and cargo aircraft. The company was founded in 1993 in Singapore as a joint venture between Singapore Airlines and US-based Boullioun Aviation Services. In 2006, the company was acquired by the Bank of China and took on its current name. Listed on the Stock Exchange of Hong Kong in 2016, BOC Aviation remains headquartered in Singapore but has operations in Dublin, London, New York, and Tianjin. Bank of China remains its largest shareholder with a 70% stake. BOC Aviation has an international management team, with key leaders having more than 30 years of experience in the aircraft and leasing business.
Sector
Industrials
Industry
Rental & Leasing Services
Stock Style Box
Large Value
Total Number of Employees
203
Website
https://www.bocaviation.com

Competitors

Valuation

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Metric
02588
01055
00293
Price/Earnings (Normalized)
 7.83—7.06
Price/Book Value
 0.951.610.86
Price/Sales
 2.630.330.60
Price/Cash Flow
 3.541.573.36
Price/Earnings
02588
01055
00293

Financial Strength

Metric
02588
01055
00293
Quick Ratio
 0.340.160.53
Current Ratio
 0.350.230.58
Interest Coverage
 —1.023.51
Quick Ratio
02588
01055
00293

Profitability

Metric
02588
01055
00293
Return on Assets (Normalized)
 2.99%−0.57%4.82%
Return on Equity (Normalized)
 12.44%−4.80%15.48%
Return on Invested Capital (Normalized)
 3.13%−0.06%8.81%
Return on Assets
02588
01055
00293

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