Event
HNA Holdings announced that in September, ASK120.26 billion, an increase of 45.1% over the same period last year, RPK10.324 billion, an increase of 42.3% over the same period last year, passenger traffic volume of 6.19 million, an increase of 54.5%, a year-on-year decrease of 1.7%, while at the same time HNA disclosed plans to acquire 49.39%, 10.25% and 37.62% of controlling subsidiaries Shanxi Airlines, Xinhua Airlines Group and Changan Airlines respectively with 1.23 billion, 1.35 billion and 3.06 billion, respectively.
Continue the rapid growth and catch up with the three major airlines
In September, the company introduced seven passenger planes and withdrew one passenger plane. In the first three quarters, the company introduced a total of 46 aircraft and withdrew 6 aircraft, with a fleet of 379aircraft, continuing the trend of high-speed expansion. the passenger traffic volume of the company in that month is second only to 9.28 million of China Southern Airlines, 9.05 million of China Eastern Airlines and 8.49 million of Air China, and the gap is narrowing.
The international line continues to be built, and the domestic expansion continues unabated.
In September, the company opened five new international routes, including Shanghai-Tel Aviv, and continued to build international routes. The growth rate of ASK decreased by 16.3% from the previous month, but it was still at a level of 40%. However, due to the supply pressure caused by the new route, RPK grew by 31.3%, and the occupancy rate was 74.7%, down 5% from the same period last year. The expansion of domestic lines is unabated, with ASK growth rate of 46.9% and month-on-month growth rate of 4.4%, while thanks to strong demand, RPK growth rate is still 45%, with an occupancy rate of 89.4%, only a slight drop of 0.8%.
Acquisition strengthens control over subsidiaries and strengthens business coordination
After the acquisition of minority shareholders of Shanxi Airlines, Xinhua Airlines Group and Changan Airlines, the shareholdings of Shanxi Airlines, Xinhua Airlines Group and Changan Airlines reached 72.8%, 61.7% and 97.1% respectively. There are many subsidiaries of HNA Holdings, and the layout of the main aviation industry varies geographically. strengthening the control of subsidiaries will help to strengthen the business coordination of different regions, optimize the allocation of resources, improve the degree of integration, and improve the overall operational efficiency. Improve profitability in the long run.
Investment suggestion
We believe that the industry will still be in a high prosperity range, and it is expected that Hainan Airlines will continue to expand at a high speed for some time in the future, and the rapid growth under a larger volume will help to further improve the market share. however, it is difficult to improve the quality of short-term income. It is estimated that the income growth rate from 2017 to 2019 will be 45.5%, 19.5% and 18.4% respectively, and the return net profit will be 2.88 billion, 2.83 billion and 3.59 billion respectively. The growth rates were-8.2%,-1.8% and 26.9%, respectively. The PE of EPS was 0.17,0.17,0.21 yuan respectively. The target price was 3.7 yuan, corresponding to 21.6,22.1,17.2 times of EPS in 2017-2019.
Risk tips: macroeconomic downturn, sharp rise in oil prices, sharp fluctuations in exchange rates, security accidents
