Daily Investment Strategy
Daily focus:BOC aviation(2588)
The global aviation industry is facing a shortage of aircraft supply. The International Air Transport Association (IATA) predicts that only 1,802 new aircraft will be delivered in 2025 due to ongoing supply chain issues, representing about 6% of the total fleet, which is lower than the previously expected 1,951. Strong demand has led to a significant rise in the leasing rates of second-hand aircraft, currently 20% to 30% higher than in 2019. IATA anticipates continued growth in passenger traffic in 2025, while the outlook for cargo remains strong due to ongoing challenges in the shipping industry. BOC aviation maintains an aircraft utilization rate of over 99%, with all aircraft rented out by the end of the year. Currently, BOC aviation’s average lease term is 7.9 years, leading the industry, with relatively stable cash flow. In 2024, BOC aviation completed the delivery of 38 aircraft, expanding its owned fleet to a record high of 435. During the year, 29 owned aircraft were sold, one more than Bloomberg's expectations, and higher than the 20 aircraft sold in 2023. This indicates an improving transaction environment for lessors, consistent with rising asset values. Against the backdrop of a recovering global aviation industry, both aircraft values and rental yields are on the rise. BOC aviation's fleet size is in a competitive position globally, allowing it to capitalize on cyclical opportunities for aircraft value appreciation. Target price: $66.
Trump pauses tariffs on imports from Mexico and Canada for 30 days
Canadian Prime Minister Justin Trudeau stated that Trump agreed to delay the imposition of new tariffs on imports from Canada for 30 days. Earlier, Trump also announced a one-month pause on tariffs for imports from Mexico. The S&P 500 index rebounded as fears about the economic impact of the global trade war eased. This week is set to be the most significant week for fourth-quarter earnings, which are increasingly crucial in determining market conditions. Over 120 companies in the S&P 500 are expected to report their earnings, including Alphabet and Amazon, which will release their quarterly figures on Tuesday and Thursday, respectively. Several other major firms, including Alibaba, AMD, Disney, Qualcomm, and Uber, are also scheduled to report this week.
Hong Kong Stock Connect had a net inflow of HK$9.0bn on Monday of which Tracker Fund (2800) had the largest net inflow, reaching HK$3.55bn; followed by HSCEI ETF (2828). SMIC (981) recorded the largest net outflow at $0.85bn, followed by Kingsoft Cloud (3896).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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