The company announced its third quarterly report for 2023: 23Q3 made a profit of 3.64 billion, a record high for a single quarter. Financial data:
1) 2023Q3: revenue 36.11 billion, year-on-year + 118.9%, compared with 19 years + 4.3%, profit 3.64 billion (loss of 9.38 billion in the same period of 22 years), the highest in a single quarter in history, 19Q3 made a profit of 2.42 billion. 23Q3 deducts 3.48 billion of the non-profit, the RMB appreciates 0.6% during the period, and the exchange gain is estimated to be 230 million. 2) the first three quarters: revenue 85.54 billion, year-on-year + 138.6%, compared with 19 years-8.4%; loss of 2.61 billion in the first three quarters (loss of 28.12 billion in the same period of 22 years), deducting non-loss of 3.2 billion, depreciation of 3.1% of RMB in the first three quarters, estimated exchange loss of 1.1 billion.
3) other income: Q3 other income is 1.23 billion yuan, + 104.2% year-on-year, 3.72 billion in the first three quarters, + 59.6% year-on-year.
Business data: 23Q3:ASK year-on-year + 119.8%, compared with 19-0.5% dint RPK year-on-year + 149.7%, compared with 19-7.5%, occupancy rate 76.6%, year-on-year + 9.2pct, compared with 19-5.8pct. In the first three quarters: ASK year-on-year + 133.8%, compared with 19-11.5% Personality RPK year-on-year + 171.4%, compared with 19-21.1%, occupancy rate 73.7%, year-on-year + 10.2pct, compared with 19-8.9pct.
Revenue level: Q3 passenger km income exceeds 14% in the same period of 19 years. 1) it is estimated that the passenger revenue of 23Q3 passenger kilometers (including fuel surcharge) is 0.63 yuan (including fuel surcharge), + 1.7% compared with the same period last year, + 14.3% compared with the same period in 19 years, and 0.49 yuan per kilometer, + 15.6% from the same period last year, compared with + 6.2% in 19 years. 2) it is estimated that the passenger revenue of passenger kilometers in the first three quarters is 0.60 yuan, + 7.2% compared with the same period last year, an increase of 17.4% over the same period of 19, and that of passenger kilometers is 0.44 yuan, + 24.4% compared with the same period last year, and + 4.7% over the same period of 19 years.
Cost: the cost of withholding oil per Q3 unit is only 2.3% higher than that of 19 years. 1) the operating cost of 23Q3 is 30.2 billion, which is + 35.1% compared with the same period last year. Among them, the cost of aviation oil is estimated to be 11.2 billion, an increase of 37.8% over the same period last year. During the period, the cost of comprehensive mining of domestic oil prices was-24.9% compared with the same period last year. The cost of withholding oil is 19 billion, which is + 33.6% compared with the same period last year. The cost of seat kilometers is 0.433 yuan,-38.5% compared with the same period last year, an increase of 10.3% over 19 years; the cost of deducting fuel for seat kilometers is 0.272 yuan,-39.2% year-on-year, and + 2.3% compared with 19 years. 2) the operating cost in the first three quarters is 81 billion, year-on-year + 43.7%, estimated aviation fuel cost 28.6 billion, year-on-year + 67.5%, seat kilometer cost 0.454 yuan, year-on-year-38.5%, compared with 19 years + 14.7%, seat kilometer deduction cost 0.293 yuan, year-on-year-43.0%, compared with 19 years + 8.9%. 3) fees: the total 23Q3 three fees (foreign exchange deduction) is 3.46 billion,-12.8% compared with the same period last year, and the foreign exchange deduction rate is 9.6%. In the first three quarters, the three foreign exchange deduction fees totaled 10.06 billion, + 6.0% compared with the same period last year, and the foreign exchange deduction rate was 11.88% (note: excluding R & D expenses).
Investment advice: 1) profit forecast: taking into account the company's performance in the first three quarters, the current oil price level and the progress of international recovery, we adjust our profit forecasts for 23-25 to a projected loss of 3.8 billion, a profit of 14.7 billion and a profit of 16.2 billion (the original forecast was 3.7 billion, 16.3 billion and 18.1 billion). The corresponding EPS in 23-25 years was-0.17,0.66 and 0.73 yuan respectively, and the PE in 24-25 years was 6 and 6 times, respectively. 2) emphasize that since 23Q3, China's aviation industry has entered a real profit cycle. Q3 China Eastern achieved a record profit of 3.64 billion in a single quarter, and the average recovery of Q3 China Eastern International ASK was about 56 per cent, according to the company's monthly operating data. According to the latest winter and spring time plan, 23 winter and spring international routes plan to increase classes to 70% in 19 years. And on October 27, the US Department of Transportation announced additional flights between China and the United States. starting from November 9, the Chinese Aviation Department will be allowed to operate a total of 35 regular direct passenger flights between China and the United States each week (currently 24). If the United States operates equally, a total of 70 classes will be restored to about 20% in 19 years. Wide-body aircraft gradually fly overseas, excess capacity to return to the international, the price side will have more support. Continue to emphasize that since Q3, China's aviation industry is expected to enter a truly profitable cycle, the 24-year Q1 Spring Festival travel season may be more to look forward to. With reference to the company's historical average PE and the traditional pricing method of cyclical stocks, it is given a profit of 10 times PE during the 24-year boom period, corresponding to a market capitalization of 147.4 billion yuan, with a target price of 6.61 yuan, which is expected to be 56% higher than the current space, maintaining the "recommended" rating.
Risk tips: a sharp decline in the economy, a sharp rise in oil prices, a sharp devaluation of the exchange rate.