Event: The company released its three-quarter report for 2023. In the first three quarters of 2023, it achieved revenue of 119.491 billion yuan, +70.31% year-on-year; realized net profit of 1,320 million yuan; realized net profit of 1,320 million yuan, and realized net profit deducted from non-return mothers - 151 million yuan. In the third quarter of 2023, it achieved operating income of 47.661 billion yuan, +62.42% year-on-year; realized net profit of 4.195 billion yuan; realized net profit of 4.195 billion yuan, achieved net profit after deducting non-return mother's net profit of 3.809 billion yuan, and achieved single-quarter profit in '23.
The resumption of routes in '23, driven by a combination of holidays and summer travel, has seen a recovery on the air travel demand side:
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 Southern Airlines' RPK for the first three quarters was 180645.07 million passenger kilometers, +117.13% year-on-year, of which domestic +94.24%, international +656.04%, and regional +1242.99%; recovered to 84.46% in 2019, including domestic recovery to 106.32% in 2019, international recovery to 37.03% in 2019, and regional recovery to 48.23% in 2019.
Supply-side capacity investment increased, and the company's overall seat kilometers were increased by 85.85% year-on-year. China Southern Airlines' ASK for the first three quarters was 233202.95 million passenger kilometers, +85.85% year-on-year, including domestic +67.6%, international +488.41%, regional +683.75%; recovery to 90.51% in 2019, including domestic recovery to 114.52% in 2019, international recovery to 38.5% in 2019, and regional recovery to 48.53% in 2019.
23 The volume of the winter and spring season increased at all times, raising the level of profit. With the winter and spring season changing in '23, the total number of flights on all China Southern Airlines routes increased by 12.97% compared to the same period in 2019, with an increase of 20.88% within China, a return to 69.59% of international routes in 2019, and a return to 58.59% of regional routes in 2019.
Investment advice: The company's performance recovery for the third quarter of '23 was impressive. With the resumption of domestic and overseas routes, China Southern Airlines has better route times at Guangzhou and Beijing Daxing Airport in China, and has more routes in the Southeast Asian region where recovery is better. We adjusted our net profit forecast for 2022-2024 from 28.0/141.5/16.09 billion yuan to 13.9/130.7/160.1 billion yuan. Based on the latest closing price, PE is 79.9/8.5/6.9. Maintain the company's “buy” rating.
Risk warning: macroeconomic risk; policy risk; exchange rate risk; fuel risk.