BOC Aviation (2588.HK): The leading air leasing lessor in Asia backed by BOC September 26, 2018 369

Investment Summary

BOC aviation (BOCA) is a leading global aircraft operating leasing company in Asia, currently with a portfolio of 295 owned and 29 managed aircrafts. We initiate an “Accumulate” rating based on a Price-to-book ratio vs. Return on Equity method, deriving a target price of HK$70.5, 14.5% potential upside. (Closing price at 21 September 2018)

Advantage on low funding cost

Supported by the parent company – Bank of China, and its financial strength, BOCA enjoyed a lower-than-peers funding cost, only 2.8% in 2017. Moreover, BOCA was rated as A- by Standard & Poor`s and Fitch, above almost all its peers, which justify a cheaper funding cost than peers. A low funding cost allows lower lease rate to airline customers, thereby offering a more competitive package than other major competitors.

About the author

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Terry Li
Investment Analyst

Graduated from Lingnan University, with Master of Science in International Banking and Finance and Bachelor of Business Administration respectively. Specializes in analyzing company fundamentals and valuation to explore investment opportunities in TMT, Education and Financial industry.

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