UBS: Raises BOC AVIATION (02588) Target Price to 96.9 Hong Kong Dollars, Expects the Company's Profit to Reach 720 Million US Dollars Last Year.

UBS released a research report stating that BOC AVIATION (02588) is benefiting from accelerating asset growth and is now moving towards a new cycle of increasing return on equity (ROE). It is expected that the ROE will reach 11.7% in 2026 and 12.7% in 2027, higher than the 10.9% in 2025. The bank believes that with the increase in ROE, there is room for the company's valuation to be re-rated. The bank slightly raised BOC AVIATION's profit forecast for last year by 2%, but lowered the profit forecast for 2026 and 2027 by 2% to 4% to reflect the use of higher interest rate assumptions. The bank raised the company's target price from HK$86.5 to HK$96.9 and maintained a "buy" rating. UBS expects BOC AVIATION's profits for last year to reach around US$720 million; capital expenditure is in line with the forecast guidance of US$4 billion; and leasing business revenue growth is expected to accelerate from 1% in the first half of last year to the forecasted 5.5% in the second half. In terms of shareholder returns, the bank expects the company to pay a full-year dividend of $0.36, with a payout ratio of 35%. However, due to the company's ample room for capital structure improvement, it cannot be ruled out that it may gradually lean towards a more generous dividend policy.