The company released its mid-2017 report. 1H2017 realized operating income of 28.526 billion yuan (+ 50.17%), net profit of 1.147 billion yuan (deducting 988 million yuan) and earnings per share of 0.0683 yuan (0.0588 yuan) belonging to the parent company.
Summary of operating data. 1H2017 achieved a total turnover of 5.823 billion t / km, an increase of 48.28% over the same period last year, 34.2091 million passengers, an increase of 53.29%, and cargo and postal traffic reached 224100 tons, an increase of 11.62% over the same period last year. The number of flights reached 259500, an increase of 69.70 percent over the same period last year, and flight hours reached 590500 hours, an increase of 60.21 percent over the same period last year.
Complete the acquisition of shares in Tianjin Airlines. HNA Holdings completed its stake acquisition of Tianjin Airlines in January this year, which is listed together with Beibu Gulf Airlines, which is controlled by HNA Holdings. The registered capital of Tianjin Airlines is 8.192 billion yuan, the proportion of all rights and interests of the company is 87.28%, the operating income of the first half of 2017 is 5.148 billion yuan, and the net profit is 244 million yuan; the registered capital of Guangxi Beibu Gulf Airlines is 3 billion yuan, the proportion of all rights and interests of the company is 70%, the operating income is 867 million yuan and the net profit is 38 million yuan in the first half of 2017.
The process of internationalization has been accelerated in an all-round way. HNA Holdings continues to launch international routes, opening five new intercontinental routes, including Chongqing = Los Angeles, Chengdu = Los Angeles, Chongqing = Moscow, Tianjin = Moscow and Kunming = Moscow. The available seat kilometers of international routes increased by 99.43% in the first half of the year, almost double that of the same period last year and twice the overall growth rate of transport capacity. Xiangpeng Airlines has opened a route to and from Moscow in Kunming, becoming the first low-cost airline in China to open a long-range intercontinental route.
Exchange sensitivity of oil prices. The China Daily disclosed that in the first half of 2017, aviation fuel costs accounted for 28.40% of operating costs, and every 5% increase or decrease in aviation oil prices would increase or reduce operating costs by 349 million yuan. As of June 30, 2017, in terms of various US dollar financial assets and US dollar financial liabilities, if the RMB appreciates or depreciates by 5% against the US dollar, it will increase or decrease pre-tax profits by about 1.537 billion yuan.
Investment advice: as the first mainland aviation company to win the title of SKYTRAX five-star airline for seven times, HNA has continuously accelerated the implementation of international strategy in recent years, with remarkable results. We estimate that the EPS of the company in 2017-18 is 0.20 yuan and 0.24 yuan respectively. Give a "buy-A" investment rating with a 6-month target price of 3.95 yuan.
Risk tips: a sharp rebound in oil prices, accelerated devaluation of RMB, lower-than-expected demand, etc.
