Event: The company released its report for the third quarter of 2023. In the first three quarters, the company achieved revenue of 14.103 billion yuan, an increase of 113.52% over the previous year. Net profit for the same period last year was 2,677 billion yuan, compared to -1,737 billion yuan; in the 2023Q3 quarter, the company achieved operating income of 6.072 billion yuan, an increase of 105.75% over the previous year, and realized net profit of 1,839 million yuan, compared to -492 million yuan in the same period last year.
Comment:
The companies ASK and RPK exceeded the same period in '19. The company's ASK in the first three quarters of 2023 reached 35.62 billion kilometers, an increase of 10.58% over 2019; RPK reached 31,850 million kilometers, an increase of 7.72% over 2019; ASK in the third quarter exceeded 18.92% in the same period in 2019, and RPK in a single quarter exceeded 18.73% in the same period in 2019; in addition, the average monthly attendance rate for the third quarter reached 89.42%, only 2.37% less than the same period in 2019. The passenger occupancy rate for the third quarter was 91.80%, compared to 2019 The difference for the same period of the year was only 0.15%.
Fleet expansion and increased capacity effectively guarantee future aviation demand. As of the end of September '23, the company operated 122 Airbus A320 series aircraft, and added 2 new A320neo aircraft in the third quarter. Under the single model and single class business model, the number of seats available is usually 10%-15% higher than that of two-cabin aircraft companies, which will increase the company's performance.
With cost advantages and steady management, the company's performance has been continuously realized. The company continues to reduce cost control fees, and unit fuel deductions are already lower than the same period in 2019. The company's sales, management and financial expenses for the third quarter were 1.02%, 1.04%, and 1.15% respectively, down 0.64%, 0.61%, and 4.69% respectively from the same period in 2022. In terms of gross margin, the quarterly quarter of 2023 was 12.61%, 14.11%, and 31.09%, respectively, up -4.63%, 4.45%, and 6.41% from the same period in 2019.
Profit forecast: Maintaining the company's “buy” rating. Although the company is at a relative disadvantage compared to the three major airlines in competing for routes and flight schedules, the company has realized profits through measures such as a low-cost business model and actively nurturing declining markets. Although the aviation market is currently facing the triple test of the traditional low season, high fluctuations in oil prices, and the depreciation of the RMB, we believe that with the continuous implementation of price marketing strategies, continuous improvement in supply and demand fundamentals, and the gradual increase in the recovery rate of overseas routes, the company will continue to expand its profit range. It is estimated that in 2023-2025, the company will achieve operating income of 165.05/204.81/24.274 billion yuan, net profit of 19.32/39.22/5082 billion yuan respectively, corresponding PE of 27.60x/13.60x/10.49x, respectively.
Risk warning: changes in overseas macro factors exceed expectations, industry policy risks, oil price fluctuation risks, exchange rate fluctuation risks, interest rate fluctuation risks, profit forecasts and valuation models fall short of expectations