Investment highlight
Covering China Eastern Airlines Logistics (601156) for the first time, it gives the industry a rating of outperforming industry, with a target price of 26.00 yuan, corresponding to a price-to-earnings ratio of 16.2 yuan to 13.3 times the price-to-earnings ratio of 2021. The reasons are as follows: aviation logistics industry: long-term optimistic about cross-border e-commerce and international 2B logistics. 1) demand side: consumption upgrading leads to the rapid growth of air door-to-door compliance demand. With brands going out to sea and industry development, cross-border e-commerce and international 2B logistics will contribute considerable increments to the industry. We expect China's aviation logistics to grow into an industry with a scale of more than 700 billion yuan; 2) supply side: six domestic aviation departments are among the top 10 in the international route all-cargo aircraft market, with a certain scale advantage. We believe that as long as we can strengthen the door-to-door performance capacity and enhance the added value of services, China Aviation Department is expected to accelerate penetration in external competition; short-term supply is tight, freight rates will remain high.
China Eastern Airlines Logistics: the two traditional businesses are the chassis of integrated logistics for network operation. 1) Air express: in 2020, the market share of domestic routes is about 13%, and that of international routes is about 8%. The company operates 10 all-cargo aircraft, 725 passenger aircraft belly cabin resources, the company expects that the "14th five-year Plan" will expand the size of the all-cargo fleet to 15-20. In terms of resources, domestic routes have the advantage of the main base of Shanghai, and the number of navigation points of international routes is not inferior to that of overseas logistics operators; in terms of management, the loading rate and utilization hours of all-cargo aircraft are better than those of their counterparts. 2) ground service: high barrier, high profit and high stability of ground service, which is the ballast stone for the company to leap over the fluctuation of freight rate. The company's operating share in domestic airport cargo terminals is 15.5%, and the gross profit margin of ground services is stable at more than 35%. The airport cargo terminal is the key node to determine the time limit in the whole link of air logistics. As the company deepens the layout of the cargo terminal, we believe that it is expected to bring new growth points in the future.
Integrated logistics: to create blockbuster products, the performance is expected to change qualitatively in the future. Integrated logistics revenue CAGR reached 46% in the past 4 years, which is the development direction and long-term focus of the company. In recent years, China Eastern Logistics has made use of the resource advantages of air transport and cargo terminal business to target subdivided tracks with growth potential, such as cross-border e-commerce (high-view demeanor), direct origin (high-end consumption), health care (new demand) and so on. Benefiting from the upgrading of consumption, we believe that cross-border e-commerce and direct access to origin are expected to become an important breakthrough in the qualitative change of the company's comprehensive logistics performance.
What is the biggest difference between us and the market? We believe that the market has not fully understood the competitive advantages of China Eastern Airlines logistics and the growth of integrated logistics business.
Potential catalyst: the proportion and profitability of integrated logistics business are further improved; freight rates remain high.
Profit forecast and valuation
We estimate that the EPS of the company for 21-23 years is 1.60,1.95,1.12 yuan respectively, and the CAGR is-16.4%. CAGR for 1923 is 22.5%. The current share price corresponds to the company's price-to-earnings ratio of 12.6 to 10.4 times the 22-year price-earnings ratio of 2021. We give the company a target price of 26.0 yuan per share, with 29% room to rise, covering the industry rating for the first time.
Risk
Trade frictions between China and the United States, fluctuations in jet fuel prices, and the resumption of international passenger flights led to a sharp correction in freight rates.