Brief comment on performance
On October 30, 2023, Spring and Autumn Airlines released the third quarter report of 2023. In the first three quarters of 2023, the company realized operating income of 14.1 billion yuan, an increase of 114 percent over the same period last year; the net profit of returning to the mother was 2.68 billion yuan, compared with-1.74 billion yuan in the same period last year; of which Q3 realized operating income of 6.07 billion yuan, an increase of 105.8 percent over the same period last year; and realized net profit of 1.84 billion yuan, compared with-490 million yuan in the same period last year.
Business analysis
Strong demand during the summer travel season of 2023 contributed to a substantial increase in income. The strong demand for air travel in the summer peak season of 2023 led to a substantial increase in the company's Q3 operating data. The RPK of 2023Q3 company is 119% in 2019, of which the domestic RPK is 154% in 2019, the RPK of international region is 50% in 2019, the percentage of ask in 2019 is 119%, of which the domestic ASK is 155% in 2019, the ASK of international region is 51% in 2019, and the occupancy rate is restored to 92%, which is basically the same as in 2019. In terms of price, affected by the good recovery of demand and the collection of fuel surcharge, the company's customer revenue is more than 10% higher than in 2019. Affected by the rise in volume and price, the company's Q3 operating income was 6.07 billion yuan, an increase of 106% over the same period last year and 38% over 2019.
Unit costs continued to improve, with gross margins higher than in 2019. The average ex-factory price of 2023Q3 domestic aviation kerosene was 6525 yuan / ton, down 25% from the same period last year and 34% higher than in 2019. Over the same period, the company's turnover improved significantly, with the unit operating cost of 0.31 yuan, down 17% from the same period last year and still 6% higher than in 2019. Benefiting from a substantial increase in income, 2023Q3 gross profit margin was 31.1%, an increase of 6.4pct over 2019. In terms of expense rate, 2023Q3's sales, management, R & D and financial expense rates were 1%, 1%, 0.6% and 1.2% respectively, reducing 0.6pct, 0.6pct, 0.5pct and 4.7pct respectively compared with the same period last year, and a total reduction of 6.4pct. The gross profit margin and expense rate were improved, and the net profit of Q3 was 1.84 billion yuan, an increase of 113% over 2019.
International routes will be actively resumed in the new season, and overall growth is expected. The new winter and spring flight season in 2023 has begun, and the company has actively increased its shifts. The overall number of passenger flights is 4197 shifts per week, an increase of 38.4% over 2019. Among them, the company is more active in the recovery of international passenger flights, and the planned flight volume has returned to 99.5% in 2019. It is basically the same as 2019, higher than the industry level, indicating the company's confidence in the recovery of international business. If international flights resume, the company's utilization rate is expected to be further improved and profitability will be further improved.
Earnings forecast, valuation and rating
Considering the rapid recovery of the company, the net profit for 2023-2025 is forecast to 2.7 billion yuan, 4 billion yuan and 4.6 billion yuan (the original 1.9 billion yuan, 3.3 billion yuan, 3.9 billion yuan). Maintain a "buy" rating.
Risk hint
The risk of lower-than-expected recovery of demand, the risk of exchange rate fluctuations, the risk of rising oil prices, the risk of dilution, and the risk of safety accidents.