Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Event-Driven

<ul>
<li>General Electric intends to offload its entire shareholding via a secondary offer, a positive development as it removes the share overhang</li>
<li>Opportune time to own Aercap as aircraft is in high demand and supply chain disruptions mean limited supply over the medium-term, ensuring high lease rates and strong profits </li>
<li>BUY with target price of $81.45 (+21% UPSIDE) pegged to FY24 P/BV of 0.94x, Aercap is the best in the pack with superior net lease margin, finance cost, and ROE     </li>
</ul>


General Electric intends to offload its entire shareholding via a secondary offer, a positive development as it removes the share overhang
Opportune time to own Aercap as aircraft is in high demand and supply chain disruptions mean limited supply over the medium-term, ensuring high lease rates and strong profits 
BUY with target price of $81.45 (+21% UPSIDE) pegged to FY24 P/BV of 0.94x, Aercap is the best in the pack with superior net lease margin, finance cost, and ROE     


Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aercap-holdings-nv" target="_blank" data-smartkarma-citation="entities:28083:1" rel="noopener">AerCap Holdings NV (AER US)</a> (AerCap) 2023 result was excellent; record core profit of USD2.4b, 27% ROE, and share buyback of USD2.6b of shares (~18% shares in issue) </li>
<li>Management guided continued growth in 2024 and announced a further USD500m share buyback (~3% shares in issue). We think it can easily beat this lowball target       </li>
<li>Poised for growth; aircraft lease rates and asset values are rising. Maintain BUY with higher TP of USD90.6 (+16% UPSIDE) pegged to FY24 P/BV of 0.94x (1SD above LT average)   </li>
</ul>



AerCap Holdings NV (AER US) (AerCap) 2023 result was excellent; record core profit of USD2.4b, 27% ROE, and share buyback of USD2.6b of shares (~18% shares in issue) 
Management guided continued growth in 2024 and announced a further USD500m share buyback (~3% shares in issue). We think it can easily beat this lowball target       
Poised for growth; aircraft lease rates and asset values are rising. Maintain BUY with higher TP of USD90.6 (+16% UPSIDE) pegged to FY24 P/BV of 0.94x (1SD above LT average)   


AerCap (AER US): Splendid 2023, More to Come in 2024

Thematic (Sector/Industry)

<ul>
<li>An excellent article by Keith Mwanalushi in Aviation Week Network is a must read, here is the link <a href="https://aviationweek.com/mro/supply-chain/engine-supply-chain-experiences-shifting-pain-points" target="_blank" rel="noopener">Engine Supply Chain Experiences Shifting Pain Points | Aviation Week Network  </a>
</li>
<li>Underpins our thesis that engine issues disrupt aircraft supply, pushing lease rates higher - especially on aircraft coming off leases, and for spare engines </li>
<li>
<a href="https://www.smartkarma.com/entities/ftai-aviation-ltd" target="_blank" data-smartkarma-citation="entities:28793:1" rel="noopener">FTAI Aviation (FTAI US)</a> is the prime beneficiary with a portfolio of engines followed by <a href="https://www.smartkarma.com/entities/aercap-holdings-nv" target="_blank" data-smartkarma-citation="entities:28083:1" rel="noopener">AerCap Holdings NV (AER US)</a> with engines and mid-life aircraft coming off leases</li>
</ul>


An excellent article by Keith Mwanalushi in Aviation Week Network is a must read, here is the link Engine Supply Chain Experiences Shifting Pain Points | Aviation Week Network  

Underpins our thesis that engine issues disrupt aircraft supply, pushing lease rates higher - especially on aircraft coming off leases, and for spare engines 

FTAI Aviation (FTAI US) is the prime beneficiary with a portfolio of engines followed by AerCap Holdings NV (AER US) with engines and mid-life aircraft coming off leases


Engine Supply Chain Experiences Shifting Pain Points

<ul>
<li>IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher</li>
<li>Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value </li>
<li>Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap's attractiveness </li>
</ul>


IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher
Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value 
Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap's attractiveness 


Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

<ul>
<li>This report explains the nuts and bolts of the aircraft leasing industry in a simple manner, along with its opportunities, risks, and business outlook.  </li>
<li>We are in a golden era, underpinned by strong global traffic recovery, and supply shortage due to technical and manufacturer snafus. Airlines are also increasingly struggling to access credit. </li>
<li>
<a href="https://www.smartkarma.com/entities/aercap-holdings-nv" target="_blank" data-smartkarma-citation="entities:28083:1" rel="noopener">AerCap Holdings NV (AER US)</a> is our top pick on its superior business profile and attractive valuation, the second choice is <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">BOC Aviation (2588 HK). </a>
</li>
</ul>


This report explains the nuts and bolts of the aircraft leasing industry in a simple manner, along with its opportunities, risks, and business outlook.  
We are in a golden era, underpinned by strong global traffic recovery, and supply shortage due to technical and manufacturer snafus. Airlines are also increasingly struggling to access credit. 

AerCap Holdings NV (AER US) is our top pick on its superior business profile and attractive valuation, the second choice is BOC Aviation (2588 HK). 



Aircraft Leasing 101 - Heralding the Golden Era

Ireland

AerCap Holdings NV is the world's largest aircraft leasing firm by fleet value, and is listed on the New York Stock Exchange (AER). It has its headquarters in Dublin with offices in Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

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AerCap Holdings NV (AER US)

Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

The principal shareholder intends to sell its entire 14.5% stake, effectively removes share overhang. The leasing market is heading to a golden...

Mohshin Aziz

AerCap (AER US): Splendid 2023, More to Come in 2024

AerCap reported a record 2023 financial performance. Expect more growth in 2024, with rising lease rates and asset values. Stock remains cheap,...

Mohshin Aziz

Engine Supply Chain Experiences Shifting Pain Points

Engine supply chain issues are causing disruptions in the aircraft supply and driving up lease rates, benefiting FTAI Aviation and AerCap Holdings.

Mohshin Aziz

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Aircraft shortage & engine issues boost mid-life asset rates. 31% of Aercap's fleet are mid-life assets with renewals within the next 5 years, will...

Mohshin Aziz

Aircraft Leasing 101 - Heralding the Golden Era

Aircraft Leasing 101 is a quick and easy guide to the aircraft leasing industry. We are Bullish on Aercap and BOC Aviation, and you will be too...

Mohshin Aziz

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52-week Range

Market Cap (USDm)

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Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

The principal shareholder intends to sell its entire 14.5% stake, effectively removes share overhang. The leasing market is heading to a golden...

Mohshin Aziz

AerCap (AER US): Splendid 2023, More to Come in 2024

​AerCap reported a record 2023 financial performance. Expect more growth in 2024, with rising lease rates and asset values. Stock remains cheap,...

Mohshin Aziz

Engine Supply Chain Experiences Shifting Pain Points

​Engine supply chain issues are causing disruptions in the aircraft supply and driving up lease rates, benefiting FTAI Aviation and AerCap Holdings.

Mohshin Aziz

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Aircraft shortage & engine issues boost mid-life asset rates. 31% of Aercap's fleet are mid-life assets with renewals within the next 5 years, will...

Mohshin Aziz

Aircraft Leasing 101 - Heralding the Golden Era

Aircraft Leasing 101 is a quick and easy guide to the aircraft leasing industry. We are Bullish on Aercap and BOC Aviation, and you will be too...

Mohshin Aziz

AerCap reported a record 2023 financial performance. Expect more growth in 2024, with rising lease rates and asset values. Stock remains cheap,...

Engine supply chain issues are causing disruptions in the aircraft supply and driving up lease rates, benefiting FTAI Aviation and AerCap Holdings.