New York, NY - March 26, 2014 (www.investorideas.com newswire) Taglich Brothers released an updated research report on AeroCentury Corp., (ACY) and reiterated a Speculative Buy rating with the 12-month price target lowered to $19.40 per share from $20.00 due to lower sector valuation. The report noted the following key investment considerations:
Since 2012 ACY has diversified its operating revenue, expanding in Asia and Africa from Europe/UK and North America. The diversification effort continued with the purchase of four Bombardier Canadair CRJ700 series regional aircraft since 4Q13. The CRJ700 series should support an increase in average monthly lease revenue in 2015.
In 2014, we increased our prior projection by one to 35 aircraft/engines on lease for a majority of the year. ACY has four leases set to expire by June 30 2014, which we anticipate should be extended.
4Q13 lease revenue (reported on 3-11-14) decreased by 22.6% to $4.9 million. Net loss was ($0.90) per share compared to a profit of $1.14 per share in the year-ago quarter. Sales were $278,000 above our forecast. We projected a small profit. The loss was due to an unanticipated increase in maintenance costs by $1.8 million to $2.5 million.
We project 2014 lease revenue to increase by 6.9% to $20.1 million or a $100,000 reduction from our prior forecast. We increased assets on lease by one but decreased the average lease rate by $21,000 to $574,000. Our loss projection of ($0.26) per share is down from our prior forecast of $2.22 per share. The loss includes higher than anticipated maintenance, interest, and depreciation expense due to the purchase of four aircraft and return of older aircraft in the 2H14.
We project 2015 lease revenue to increase by 3.9% to $20.9 million due to 36 assets on lease and an increase in the average lease rate by $14,000 to $588,000. Our EPS projection of $1.63 per share reflects a $2.8 million reduction in maintenance expense from our 2014 forecast of $5.8 million.
AeroCentury Corp., (ACY) is engaged in the business of ownership, management, leasing and acquisition of aircraft, focused on used commercial turboprop aircraft equipment for lease to domestic and foreign regional air carriers.
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