Vitamin E_s holds UM and M holds AR. y] 2023Q3 initially showed profit elasticity. Considering that foreign exchange and oil prices exceeded previous assumptions, net profit due to mother in 2023 was lowered to -35 (originally 2.7) billion yuan, maintaining the 2024 forecast of 9.5 billion yuan, and adding 10.5 billion yuan to the 2025 forecast. China's aviation demand is resilient. The airline's supplementary aircraft orders will not change the capacity deceleration plan. The increase in international flights will drive the recovery of supply and demand, and the profit center can be expected to rise. The 2024 Spring Festival travel performance is expected to catalyze optimistic expectations and maintain the target price of 6.97 yuan.
2023Q3's performance surpassed pre-pandemic results, showing initial profit elasticity. The company's net profit for the 23Q3 quarter was 3.6 billion yuan. For the first time in the past three years, it reversed losses in a single quarter, up 50% from 19Q3. 1) Revenue: Compared with 19Q3, RPK recovered 92%, passenger occupancy rate was 6% lower, estimated passenger revenue increased 13% and revenue increased 4%; 2) Cost: Compared with 19Q3, ASK recovered 99%, the average price of aviation fuel increased by more than 30%, and operating costs increased 10%. 3) Exchange: The 23Q3 exchange rate was stable, about 1.1 billion yuan after loss tax was reduced compared to 19Q3.
International class increases are driving the recovery of supply and demand, and the profit center can be expected to rise. The company is China's largest carrier for Japan-Korea routes. The company's summer travel industry has resumed leading the industry. In the future, it is expected that the international economy will continue to recover steadily as the mentality of travelers develops and overseas security capabilities are restored. The significance of international recovery is not only short-term profits brought about by the concentrated release of outbound demand, but also the absorption of excess domestic capacity. When supply and demand recover, the profit center in the domestic market will drive the overall profit center to rise compared to before the epidemic.
The aircraft order replenishment is in line with expectations and will not change the long-term airspace time bottleneck. Recently, the company signed a purchase agreement with COMAC for 100 C919 aircraft, which are scheduled to be delivered in batches in 2024-31. The airline began gradually replenishing aircraft orders in 2022, and the reason behind this is a shortage of orders being processed. We believe that the supplementary aircraft order within the 14th Five-Year Plan is not an accident; it is in line with the expectations of the 14th Five-Year Plan, and does not change airspace bottlenecks and fleet deceleration plans. Under the strategy of building a super carrier, it is expected that the company will achieve a good match or even optimization of the fleet with the timing, which is conducive to long-term profit improvement.
Risk warning. Economic fluctuations, oil price and exchange rate risks, increased distribution and dilution, safety incidents, etc.