New York, NY - August 22, 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 $13.35 per share from $18.75 due to a decrease in sector valuation and a reduced 2015 income forecast. The report noted the following key investment considerations:
Since 2012 ACY has diversified its operating revenue. The diversification continued with the purchase of four Bombardier Canadair CRJ700 series regional aircraft. The CRJ700 series should support an increase in average monthly lease revenue per asset, as it comprised 29% of ACY’s net book value in July 2015 from zero in 2013.
For 2014, we reduced our projection to 26 aircraft/engines on lease for a majority of the year, from our prior forecast of 35. At June 30, 2014, ACY had 24 active aircraft leases out of 40 aircraft owned. In the 2H14 four expiring aircraft leases will likely be returned and four off-lease aircraft should be delivered to new customers.
2Q14 lease revenue (reported on 8-12-14) increased by 14.1% to $5.3 million. Net loss was ($2.30) per share compared to a profit of $3.25 in the year-ago quarter. The current quarter included impairment in the value of aircraft of $6.8 million or $2.91 per share. Sales were $500,000 below our forecast. We projected EPS of $0.28 per share.
e project 2014 lease revenue to increase by 9.6% to $20.6 million or a $2.2 million decrease from our prior forecast. We project a loss of ($2.49) per share due to a $6.8 million or $2.91 per share impairment charge. Our prior EPS forecast was $0.51 per share. The reduction is our lease revenue forecast is due to fewer than anticipated aircraft on lease in the 2H14.
We project 2015 lease revenue to increase by 2% to $21 million reflecting 30 assets on lease (up four from 2014) and a $92,000 decrease in the average lease rate to $700,000. Our EPS projection of $1.36 per share reflects a $2.4 million reduction in maintenance expense from our 2014 forecast of $6.4 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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