[Event _: Mm Gongli] released the 2023 three-quarter report. The first three quarters of 2023 achieved revenue of 14.103 billion yuan, +113.52% over the same period; realized net profit of 2,677 billion yuan, an increase of 4.414 billion yuan over the previous year; realized net profit of 2,574 billion yuan; achieved net profit deducted from non-return parents of 2,574 billion yuan, and increased profitability. In the third quarter of 2023, it achieved operating income of 6.072 billion yuan, +105.75% year-on-year; net profit of 1,839 billion yuan, a year-on-year increase of 2,331 billion yuan, the highest performance in a single quarter in history.
Following the resumption of routes in '23, driven by holidays and summer travel, the demand side of air travel recovered:
In the third quarter of 2023, the entire industry completed 3.499 million hours of transport aviation flights, an increase of 73.4% over the same period in 2019, an increase of 7.1% over the same period in 2019; a cumulative total of 1,373 million flights, an increase of 65.7% over the same period in 2019, an increase of 5.5% over the same period in 2019. The RPK for the first three quarters of Chunqiu was 31850.4 million passenger kilometers, +75.35% year-on-year, of which domestic +54.06%, international +6870.63%, and regional +1901.53%; recovered to 107.72% in 2019, of which domestic recovery to 142.96% in 2019, international recovery to 39.1% in 2019, and regional recovery to 43.15% in 2019.
Supply-side capacity investment increased, and the company's overall seat kilometers were increased by 46.49% year on year. ASK in the first three quarters of spring and autumn was 35620.43 million passenger kilometers, +46.49% year-on-year, of which domestic +27.5%, international +4789.69%, and regional +1492.02%; recovered to 110.58% in 2019, of which domestic recovery to 146.67% in 2019, international recovery to 42.68% in 2019, and regional recovery to 42.43% in 2019.
23 The volume of the winter and spring season increased, opening up time in the Beijing region, optimizing the quality of the route network, and raising the level of profitability. With the winter and spring season changing in '23, the time volume of all routes of Spring Airlines increased by 38.42% compared to the same period in 2019, with an increase of 62.54% within China, recovery of international routes to 93.71% in 2019, and regional routes to 56.06% in 2019.
Investment advice: As air travel demand recovers, the holiday travel boom is driving airline profits to recover. On the revenue side, Spring Airlines is based in Shanghai and has a layout covering all major regions in the country. International routes focus on the Southeast Asian market and radiate the development of the Northeast Asian market; on the cost side, comprehensive cost optimization is achieved through refined cost management. We adjusted Spring Airlines' 2023-2025 net profit from 25.4/367/45.1 billion yuan to 26.1/37.2/4.55 billion yuan. Based on the latest closing price, PE was 19.8/13.9/11.4 times. Maintain the company's “buy” rating.
Risk warning: risk of macroeconomic fluctuations; risk caused by market competition; risk of policy change; risk of air transport industry competition; risk of fluctuations in aviation fuel prices.