Company Announces 2023 Semi-Annual Report: Financial Data: 1) 2023H1: Revenue of 2.22 billion yuan, +77.0%, compared to '19, -10.6%, loss of 752 million yuan (loss of 953 million for the same period in '22), after deducting losses of 754 million yuan after deducting losses of 754 million, H1 RMB depreciation of 3.8%, exchange loss of 150 million yuan, calculated operating profit loss of 724 million. 2) 23Q2: Revenue was 1.17 billion yuan, up 79.7% year on year, and -4.7% from year 19; Q2 loss was 476 million (loss for the same period in '22), minus 477 million yuan in non-loss. Q2 RMB depreciated 5.2%, estimated exchange loss of 200 million yuan, calculated as a loss of 350 million. 3) Other income: H1's other revenue was 140 million yuan, +23% year on year, of which Q2 achieved 0.9 billion yuan, +115% year on year.
Operating data: 23H1: ASK +60.5%, compared to '19, +0.8%, RPK +78.4%, compared to '19, -7.2%, passenger occupancy rate 72.9%, +7.3 pct year on year, compared to '19 and -6.3 pct. 23Q2: ASK +66.6% year on year, +1.6% year on year 19, RPK +95.9% year on year, compared to -2.3% in '19, passenger occupancy rate 74.8%, +11.2 pct year on year, and -3.0 pct compared to '19.
Revenue level: a) 23H1 passenger-kilometer revenue (including fuel surcharges) was 0.56 yuan, -1.7% compared to the same period in '19, -7.6% over the same period in '19, 0.41 yuan, +9.3% year on year, and -15.0% over the same period in '19. b) Estimated Q2 passenger kilometer revenue was 0.54 yuan, -9.1% year-on-year, compared to 19Q2 -6.2%, and seat kilometer revenue was 0.40 yuan, +6.9% YoY, compared to Q2 -9.8% in '19.
Costs: 1) 23H1 operating costs 2.52 billion yuan, +33.9% year on year, 0.49 yuan per square kilometer, -16.5% year on year, an increase of 14.2% over year 19. Q2 Operating costs were 1.3 billion dollars, +32.7% year-on-year, and the cost per km was 0.47 yuan, -20.4% year-on-year, +15.7% compared to '19. 2) Expenses: The total of the three fees (deduction) for the year 23H1 was 508 million, +15.8% year-on-year, and the three deduction rate was 22.9%. Q2 The total deduction fee is 272 million yuan, and the deduction rate is 23.2% (Note: R&D expenses are not included).
The company is expected to reach an inflection point in its long-term performance in 23Q3. 1) We analyze the degree of recovery in flight volume to determine the elimination of the company's constraints. Entering 2023, the company's flight volume continued to increase month-on-month. The number of flights operated on Q1-2 was 204 and 243 respectively, an increase of 19% from quarter to quarter. The average number of flights from July to today was 274, an increase of 13% over Q2, and recovered to 84% in '19. 2) We estimated in our previous report that the company Q3 may have passed the break-even line.
We continue to be optimistic about the regional aviation market space and the company's unique business model. 1) Regional aviation: a blue ocean market with huge potential. 2) Company advantages: a) Leading market segment size: covering half of domestic regional destinations, with solo flights accounting for more than 90%. b) Under normalization: The company has both growth and stability. c) First-mover advantage, operational advantage, and innovative model jointly build core barriers.
Investment advice: 1) Profit forecast: We maintain our 23-25 profit forecast with a loss of 2.5, a profit of 0.9 billion, and a profit of 1.21 billion yuan. The corresponding EPS is -0.20, 0.71, and 0.94 yuan, respectively, and 24-25 PE is 11 and 8 times, respectively. 2) Investment advice: We believe that the company's performance is at an inflection point, is at the bottom of valuation, and will return to a growth logic. Maintaining the valuation method, taking into account the current situation and the pace of the fleet in previous years, we expect the company to introduce 7 and 8 fleets respectively in 23-24. According to the historical average stand-alone market value of 210 million, we will give the estimated 80 fleets in 2024 a target market value of 16.9 billion yuan. The target price is 13.2 yuan, which is 73% compared to the current space, and emphasizes the “push” rating.
Risk warning: The economy has declined sharply, the RMB has depreciated sharply, and oil prices have risen sharply.