First Read: BOC Aviation "2026 AIC: Resilient against fuel headwinds" (Buy)

Research evidence excerpt

First Read: BOC Aviation "2026 AIC: Resilient against fuel headwinds" (Buy)

Global Research

26 May 2026ab

First Read

EquitiesBOC Aviation

2026 AIC: Resilient against fuel headwinds China

Transportation Services

12-month rating Buy

Manageable impacts on fuel shock with new opportunities emerging

BOCA's senior management including COO Thomas Chandler attended UBS Asian 12m price target HK$106.90

Investment Conference, shedding light on the recent business trends and industry

dynamics. While higher fuel price weighed on airlines' profitability, management does

Price (26 May 2026) HK$78.85

not see a material deterioration of credit risk, given a relatively high credit quality of their

airlines customers. In contrast, management believes the elevated fuel price RIC: 2588.HK BBG: 2588 HK

environment might drive demand for more fuel-efficient aircraft and liquidity, presenting Trading data and key metrics

opportunities to BOCA such as increased demand for operating lease on new-

52-wk range HK$91.95-61.85

generation aircraft, predelivery payment financing, and purchase and leaseback

Market cap. HK$54.7b/US$6.98b

transactions. Elsewhere, demand for spare engines appears significant at the moment as

Shares o/s 694m (ORD)

a lack of aircraft retirement tightens the supply of parts. However, the company only has

a small exposure (11 engines owned and 1 engine on order as of Mar-26). We think the Free float 30%

engine leasing business is unlikely to expand considerably, given its short-term business Avg. daily volume ('000) 768

nature and relatively high inherent volatility. Avg. daily value (m) HK$61.6

Common s/h equity (12/25E) US$6.84b

Industry consolidation and undersupply of aircraft favouring lessors P/BV (12/25E) 1.0x