Boc Aviation Limited · HKEX:2588
Boc Aviation — FY2022 Earnings Presentation
41 slides from Boc Aviation's earnings presentation, Mar 9, 2023
Slide 1: 2022 Final Results Review
2022 FINAL RESULTS REVIEW MARCH 2023
Slide 2: Disclaimer
Disclaimer This presentation contains information about BOC Aviation Limited (“BOC Aviation”), current as at the date hereof or as at such earlier date as may be specified herein. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solic
Slide 3: 2022 Overview
2022 OVERVIEW ©) BOC AVIATION
Slide 4: Entered Our 30th Year With Unbroken Profitability
Entered Our 30th Year With Unbroken Profitability Key indicators Actual Core1 Explanation (US$ million) (US$ million) Total revenues and other 2,307 2,084 - US$223m of income arising from income the termination of leases to Russian airlines Core lease rental contribution2 561 561 No impact Profit be
Slide 5: Core Business Remains Resilient in 2022
Core Business Remains Resilient in 2022 Impact of write-down of aircraft in Russia US$ million (223) (61) 791 527 20 Statutory net profit Aircraft net book value Cash collateral Tax impact Core net profit after tax after tax write-down Robust underlying business 5
Slide 6: Total Dividend Per Share of US$0.2659 for 2022
Total Dividend Per Share of US$0.2659 for 2022 Maintained dividend payout ratio for FY2022 Higher final dividend per share for FY2022 US$ 0.1770 Dividend payout ratio 35% of Core NPAT1 0.1733 Total dividends declared US$185 million for 2022 Total dividend per share US$0.26592,3 2021 2022 Final divid
Slide 7: Core Net Profit After Tax Improved
Core Net Profit After Tax Improved 1H 2022 vs 2H 2022 2H 2021 vs 2H 2022 US$ million US$ million 322 322 307 206 1H 2022 2H 2022 2H 2021 2H 2022 A solid 2H 2022 Core NPAT Due to rounding, numbers presented may not add up precisely to the total core net profit after tax provided elsewhere in the pres
Slide 8: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Key indicators 31 December 2022 31 December 2021 Total assets (US$ billion) 22.1 23.9 Total available liquidity (US$ billion) 5.3 6.0 Total equity (US$ billion) 5.2 5.3 Net assets per share (US$) 7.50 7.59 Gross debt to equity (times) 2.9 3.2 Delevered due to stron
Slide 9: An Improvement in 2H 2022 over 1H 2022
An Improvement in 2H 2022 over 1H 2022 Core revenues1 Core profit before tax1 US$ million 1,111 US$ million 973 364 234 1H 2022 2H 2022 1H 2022 2H 2022 Operating cash flow net of interest2 Core net profit after tax1 US$ million 800 US$ million 717 322 206 1H 2022 2H 2022 1H 2022 2H 2022 A strong 2H
Slide 10: Continued Resilient Performance
Continued Resilient Performance Fleet growth underpins growth in revenues Strong core PBT US$ million US$ million 1 2,183 2,307 639 3 2,054 598 563 2020 2021 2022 2020 2021 2022 Rising operating cash flow net of interest2 Resilient core NPAT US$ million US$ million 3 561 527 1,517 510 1,355 1,327 20
Slide 11: 2022 Highlights
2022 Highlights 1. 29 years of unbroken profitability • Cumulative earnings of US$5.5 billion • Paid US$1.5 billion in dividends to shareholders 2. Improved revenues and profitability in 2H 20221 • Core revenues of US$1.1 billion • Core NPAT of US$322 million 3. Robust asset quality • Average fleet
Slide 12: How We Invest
How We Invest Number of aircraft delivered, purchased and sold Opportunistic PLB Russia- Global European Covid-19 Ukraine Financial acquisitions in the Crisis conflict Crisis down cycle 41 19 24 13 16 (3) 9 14 41 22 45 27 16 7 4 6 12 22 18 17 29 14 31 21 43 5 58 61 6 5 44 48 50 17 (5) 12 41 27 31 17
Slide 13: Stable Balance Sheet and Aircraft Fleet
Stable Balance Sheet and Aircraft Fleet Stable balance sheet US$ billion 23.6 23.9 22.1 18.3 19.8 4.3 4.7 3.0 3.3 3.0 16.8 18.9 19.6 19.1 15.0 2018 2019 2020 2021 2022 1 Aircraft NBV Other assets Disciplined increase in fleet size Number of owned aircraft 380 392 358 303 317 2018 2019 2020 2021 2022
Slide 14: 100% of Orderbook Comprises Latest Technology Aircraft
100% of Orderbook Comprises Latest Technology Aircraft Our aircraft portfolio Aircraft type Owned aircraft Managed aircraft Aircraft on order1 Total Airbus A320CEO family 98 15 0 113 Airbus A320NEO family 91 0 115 206 Airbus A330CEO family 8 1 0 9 Airbus A330NEO family 6 0 0 6 Airbus A350 family 9 0
Slide 15: Lease Rental Income Continues to Dominate Revenue
Lease Rental Income Continues to Dominate Revenue Lease rental income dominates total revenues and other income Interest, fee income and US$ million others 1 2,183 2,084 11% 274 236 Net gain on sale 44 64 of aircraft 3% 1,865 1,784 2021 2022 Lease rental income 86% Lease rental income Net gain on sa
Slide 16: Long-Term Leases Enhance Revenue Visibility
Long-Term Leases Enhance Revenue Visibility We have a long average remaining lease Well-dispersed scheduled lease expiries2 term1 Number of years 300 79.3% 100% 8.6 250 80% 8.3 8.1 Average remaining lease term of 8.1 years 200 60% 150 100 40% 50 1.1% 4.0% 3.3% 4.2% 1.5% 5.5% 20% 0 0% 2023 2024 2025
Slide 17: Lease Yields Improved in 2H 2022
Lease Yields Improved in 2H 2022 Lease rate factor1 Cost of debt2 3.2% 3.3% 10.0% 9.7% 2.9% 2.9% 9.1% 9.5% +40bps +40bps 2020 2021 1H 2022 2H 2022 2020 2021 1H 2022 2H 2022 Net lease yield3 1H 2022 vs 2H 2022 Net lease yield3 7.9% 7.6% 7.0% 7.1% 7.0% 1H 2022 2H 2022 2020 2021 2022 All data as at 31
Slide 18: Globally Diversified Portfolio
Globally Diversified Portfolio Lease portfolio diversified by customer1,2 …and increasingly diversified by geography3,4 Middle East and Africa Qatar Airways 12.1% Asia Pacific 9.0% (excluding Chinese American Airlines Mainland, Hong 7.1% Kong SAR, Macau Air China SAR and Taiwan) Americas 24.4% 5.0%
Slide 19: Record High Operating Cash Flow Net of Interest
Record High Operating Cash Flow Net of Interest All-time high operating cash flow net of Collection rate of 101% a key contributor interest1 US$ million 1,517 100.8% 1,355 1,327 96.9% 1H 2022 FY2022 2020 2021 2022 FY2022 operating cash flow net of interest1 Net cash flow from operating activities US
Slide 20: Diverse Funding Channels Utilised in 2022
Diverse Funding Channels Utilised in 2022 Sources and Uses of Cash US$ million Sources Uses 5,322 1,309 79 (1,208) (1,300) 1,385 Undrawn (1,808) committed 4,930 300 credit 1,517 facilities (185) 485 (182) Cash and 392 cash equivalents Cash and Operating 1 Bond Bank loans Asset sales Others Capex Bon
Slide 21: Stable Debt Structure
Stable Debt Structure US$ billion Loans (1.8) Loans 1.4 (0.2) Bonds (1.3) Bonds 0.3 16.8 15.2 Debt 13.7 13.5bn outstanding since 1 Jan 22 Indebtedness as at 1 Repayment Net RCF repayment New debt Indebtedness as at January 2022 31 December 2022 80% of debt unchanged with debt to equity of 2.9:1 at e
Slide 22: Flexible Capital Structure
Flexible Capital Structure Sources of debt1 Outstanding debt amortises over a long term US$ billion BOC BOC 12.8 9% 10% Loans Loans 25% 24% 9.4 5.9 Bonds Bonds 4.1 66% 66% 1.6 1.5 2021 2022 2023 2024 2025 2026 2027 2028 and beyond Loans Bonds Increasing unsecured funding Debt Debtrepayment by year m
Slide 23: Fixed Rate Leases and Debt
Fixed Rate Leases and Debt Fixed rate leases dominate1 High proportion of fixed rate debt2 By net book value 6% 4% 13% 25% 24% 33% 94% 96% 87% 75% 76% 67% 2020 2021 2022 2020 2021 2022 Fixed rate Floating rate Fixed rate Floating rate Continued asset and liability management to minimise impact of in
Slide 24: Two Large Orders Provide Further Impetus For Growth
Two Large Orders Provide Further Impetus For Growth Orderbook delivery schedule1,2 Total committed capex of more than US$11bn4 Number of aircraft US$ billion 7.7 138 New orders 120 with 3 44 1.5 1.9 Airbus and 24 Boeing 2023 2024 2025 and beyond 2023 2024 2025 and beyond Orderbook by direct orders v
Slide 25: Global Airline Industry Rebound Now Supported by China
Global Airline Industry Rebound Now Supported by China Traffic Growth Major passenger markets at near pre-Covid levels Total airline passengers (change vs. 2019) China US Europe 20% 0% -20% -40% -60% -80% -100% Sources: China MoT (Air Pax YoY), TravelSky (Traffic), TSA (Throughput), Eurocontrol (Fli
Slide 26: Conclusion
Conclusion • 29 years of unbroken profitability • US$5.5 billion of cumulative earnings • 2022 was another strong year • Core net profit after tax of US$527 million1 • Revenues of US$2.3 billion • Record high operating cash flow net of interest of US$1.5 billion • Maintained dividend payout ratio at
Slide 27: Appendices
APPENDICES ©) BOC AVIATION
Slide 28: The BOC Aviation Journey – 30 Years in 2023
The BOC Aviation Journey – 30 Years in 2023 Ownership Total assets SALE established with 50:50 joint US$ billion 1993 ownership between Singapore Airlines and Boullioun Aviation Services Temasek and GIC each became 1997 14.5% shareholders 1997 >0.3 2000 >1 Bank of China acquired 100% of 2006 >3 2006
Slide 29: BOC Aviation – Who Are We?
BOC Aviation – Who Are We? Top 5 Bank of China Global aircraft operating lessor1 70% owned by BOC Listed on HKEX A- Investment grade credit ratings from S&P and Fitch HKEX code: 2588 US$5.5 billion US$22.1 billion Cumulative profits since inception Total assets >US$5.0 billion 633 Available liquidit
Slide 30: Our Board of Directors
Our Board of Directors BOC-appointed Executive Directors Independent Non-executive Directors Non-executive Directors • Mdm. Chen Jing • Mdm. Zhang Xiaolu • Mr. Dai Deming (Vice-Chairman) • Mr. Dong Zonglin • Mr. Robert Martin • Mr. Fu Shula (MD & CEO) • Mr. Wang Xiao • Mr. Antony Tyler • Mdm. Wei Ha
Slide 31: Globally Diverse Management Team
Globally Diverse Management Team Robert Martin Zhang Xiaolu Steven Townend David Walton Deng Lei Paul Kent Managing Director & Vice-Chairman & Deputy Managing Deputy Managing Chief Commercial Chief Commercial Chief Executive Deputy Managing Director & Chief Director & Chief Officer (Asia Pacific Off
Slide 32: Core Competencies - BOC Aviation Track Record
Core Competencies - BOC Aviation Track Record Since inception in 1993: •• Purchasing Purchasing More than 1,000 aircraft purchased totalling more than US$58 billion •• Leasing Leasing More than 1,200 leases executed with >180 airlines in > 60 countries and regions •• Financing 1 1 Financing More tha
Slide 33: Airline Industry Poised to Surpass Pre-Covid Levels
Airline Industry Poised to Surpass Pre-Covid Levels IATA air passenger forecast by market 160% 140% Rebased, 2019=100% 120% 100% 80% 60% Domestic 40% International Total 20% 0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Domestic traffic already exceeds 2019 Source: IATA Economics 33
Slide 34: Flights Per Day in China Increased 80% in 2023
Flights Per Day in China Increased 80% in 2023 International flights per day by Chinese Domestic flights per day by Chinese airlines airlines Lunar New Year peak 12,000 350 in Jan 2023 10,000 300 8,000 250 6,000 200 4,000 150 2,000 0 100 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Aug-22 Sep-22
Slide 35: Lunar New Year’s Air Travel in China Improved Since 2020
Lunar New Year’s Air Travel in China Improved Since 2020 20% 0% Air passenger change vs 2019 2023 -20% 2021 -40% 2022 -60% -80% 2020 -100% 16 10 11 12 13 14 15 17 18 19 20 21 22 23 24 -15 -14 -13 -12 -10 -11 7 -2 0 1 2 3 4 5 6 8 9 -9 -8 -7 -6 -5 -4 -3 -1 Days to Lunar New Year (Lunar Calendar Based)
Slide 36: Airlines’ Capital Investments Are Projected to Exceed US$125 Billion by 2025
Airlines’ Capital Investments Are Projected to Exceed US$125 Billion by 2025 US$ billion 150 100 50 0 Narrowbody Widebody Value of deliveries expected to rise in the next four years All data as at 31 December 2022 Source: BOC Aviation Analysis 36
Slide 37: Total Deliveries of Narrowbody Aircraft Picked up in 2022
Total Deliveries of Narrowbody Aircraft Picked up in 2022 Narrowbody Widebody Number of aircraft per month (average) 36 102 31 80 68 66 16 16 44 13 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Total deliveries of narrowbody aircraft have exceeded 2019’s levels All data as at 31 December 2022 So
Slide 38: Managing Cost Inflation is Important
Managing Cost Inflation is Important CPI (%) 12 10 8 6 4 2 0 -2 -4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 China US EU Japan UK Escalation caps protect us from rising interest rates and prices Source: Bloomberg (28 February 2023) 38
Slide 39: Impact of Inflation
Impact of Inflation • We have moved from a low-inflation Inflation rate per Cumulative impact on annum residual value at year 12 environment to a higher-inflation environment • This should have a positive impact on aircraft values 1% 12.7% • Appraisers will have to revisit their models and assumptio
Slide 40: 2022 ESG Highlights
2022 ESG Highlights Environmental Social Governance • 100% carbon neutral for • Supports Airlink and other • Three female Board of direct emissions global and local NGOs Directors out of 11 • 100% latest technology • 1,300 volunteer hours in • Three nationalities on the aircraft in the orderbook loc
Slide 41: www.bocaviation.com
www.bocaviation.com BOC Aviation Limited 79 Robinson Road #15-01 Singapore 068897 Phone +65 6323 5559 Incorporated in the Republic of Singapore with limited liability Company Registration No. 199307789K 41