Event: The company released its three-quarter report for 2023. In the first three quarters of 2023, it achieved revenue of 85.538 billion yuan, +138.60% over the same period; realized net profit of 2,570 billion yuan; realized net profit of net income of 2,570 billion yuan, and net profit deducted from non-return mothers - 3201 million yuan. In the third quarter of 2023, it achieved operating income of 36.113 billion yuan, +118.92% over the same period last year; realized net profit of 3.642 billion yuan, and achieved net profit of 3.481 billion yuan after deducting non-return mother's net profit of 3.481 billion yuan, the highest performance in a single quarter in history.
In the first three quarters of 2023, with route repairs, small holidays and the peak summer travel season, demand side travel resumed, and China Eastern Airlines' operations turned a loss into a profit. 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. China Eastern Airlines' RPK for the first three quarters was 131454.72 million passenger kilometers, +171.39% year-on-year, including domestic +137.15%, international +1370.34%, regional +1571.37%; recovery to 78.92% in 2019, of which domestic recovery to 104.25% in 2019, international recovery to 31.3% in 2019, and regional recovery to 59.12% in 2019.
Supply-side capacity increased, and the number of available kilometers recovered to 88.48% in the same period in 2019. Domestic supply increased 17.57% over 2019. China Eastern Airlines' ASK for the first three quarters was 178,468.05 million passenger kilometers, +133.83% year-on-year, of which domestic +104.4%, international +993.32%, and regional +1145.66%; recovered to 88.48% in 2019, with domestic recovery to 117.57% in 2019, international recovery to 35.61% in 2019, and regional recovery to 63.54% in 2019.
23 The number of hours during the winter and spring season increased compared to 2019, optimizing the quality of the route network and raising the level of profitability. With the winter and spring season changing in '23, the number of flights on all China Eastern Airlines routes increased by 10.84% compared to the same period in 2019, with an increase of 18.01% within China, a return to 67.14% of international routes in 2019, and a 13.22% increase in regional routes over 2019.
Investment advice: The air travel situation has been repaired, and China Eastern Airlines turned a loss into a profit in the third quarter. It is expected that the aviation industry will usher in new profit growth as supply-side capacity increases and demand side travel enthusiasm increases.
We adjusted our net profit forecast for 2022-2024 from 8.9/123.9/15.09 billion yuan to 34.0/111.6/139.1 billion yuan. Based on the latest closing price, PE is -27.6/8.4/6.7. Maintain the company's “buy” rating.
Risk warning: economic and trade environment, geopolitics, epidemic risk; policy and regulation risk; safe operation risk; risk of fluctuating aviation fuel prices; risk of exchange rate fluctuations; risk of interest rate changes.