Main points of investment
Event: on the afternoon of August 21, 2023, Hainan Airport released its semi-annual report for 2023. The company's 2023H1 realized income of 3.37 billion yuan, + 49% year-on-year; net profit of 583 million yuan, + 808%; and non-return net profit of 478 million yuan, + 1351% of the same period last year.
The performance is basically in line with expectations, and profitability has improved significantly. Split to a single quarter, 2023Q2 achieved revenue of 2.111 billion yuan, + 96% year-on-year; return net profit to 350 million yuan, deducting non-return net profit to 281 million yuan, basically in line with expectations. 2023Q2's gross profit margin was 40.9%, up 5.6% from the same period last year; the net profit margin was 16.6%, compared with-0.1% in the same period last year; and 13.3%, compared with-0.1% in the same period last year. The profit level increased significantly, due to the release of travel consumer demand, and the production and operation of the company's airport business improved significantly.
Travel willingness to continue to repair, the airport business in an all-round way beyond the 2019 level. The number of passengers transported by 2023Q2 nationwide by rail / civil aviation is respectively 981 million, accounting for 107% of the same period in 2019. Residents' long-distance travel continues to be repaired. Airport business revenue recovered from travel, and 2023Q2 realized operating income of 956 million yuan, + 48% of the same period last year. The passenger throughput and take-offs and landings of 2023H1 at the company's nine airports recovered to 110% and 116% respectively from 110% in the same period in 2019, while the core asset 2023H1 passenger throughput and takeoffs and landings at Fenghuang Airport in Sanya increased to 108% in the same period in 2019, which is better than the national average travel situation and surpassed the pre-epidemic level in an all-round way.
The absolute value of duty-free related income maintains the 1% level of duty-free sales on the island, and the remaining 5000 square meters of duty-free shops at Sanya Phoenix Airport are expected to be put into operation this year. The company's tax-free and commercial business realized business income of 140 million yuan. According to the company's disclosure data, the rent of the duty-free pick-up point of Sanya airport, investment income of the two airport duty-free shops and tax-free venue rent are actually reflected in the tax-free related income of the statement totaling 256 million yuan, which is + 22% compared with the same period last year. The proportion of tax-free sales in Hainan outlying islands in the same period is maintained at about 1%. The second phase of the Sanya Phoenix Airport duty-free shop project is promoting the examination and approval of the operating qualifications of dutiable commodities, and the remaining 5000 square meters are expected to be put into operation this year to enhance the cash flow capacity of Sanya Phoenix Airport.
The real estate business speeds up the destocking, and the hotel business continues to improve. 2023Q2 real estate accelerated the de-inventory of real estate projects, real estate sales project signed area of 37000 square meters, + 59% year-on-year; contract amount of 570 million yuan, + 55% year-on-year. The hotel business achieved an operating income of 156 million yuan, and the willingness to travel for leisure and business travel led to the continuous improvement of hotel performance.
Profit forecast and investment rating: Hainan Airport starts high-quality development after integrating into Hainan state-owned assets, deeply participates in the construction of Hainan free trade port, and is expected to continue to enjoy the prosperity of Hainan island travel and the future free trade port policy dividend. To maintain the profit forecast of Hainan Airport from 2023 to 2025, the return net profit is 1.52 billion yuan respectively, corresponding to the PE valuation of 41-30-25, maintaining the "overweight" rating.
Risk hint: macroeconomic risk and the risk that the construction progress of Hainan Free Trade Port is not as expected.