Company Announces 2023 Performance Forecast: Expected net profit loss to mother in 2023 is 35-4.7 billion yuan, estimated loss of 4.8-60 billion yuan in Q4
1) 2023: Net profit due to mother is expected to be -47 billion to -3.5 billion, with a median value of -4.1 billion, +87.5% year-on-year; net profit without return to mother is estimated to be -70 billion to -5.3 billion, +79.4% to +84.4% year over year, median value of -6.15 billion, +81.9% year over year. The RMB depreciated 1.7% for the full year of 2023, with an estimated exchange gain of 630 million. The annual domestic comprehensive oil production price was 6,824 yuan/ton, -9.6% year-on-year.
2) 2023Q4: Expected net profit attributable to mother - 60.2 billion to -48.2 billion, with a median value of -54.2 billion, +64.1% year over year; estimated net profit without return to mother - 68.49 billion to -5149 million, +56.4% to +67.2% year over year, median value of -60 billion yuan, +61.8% year over year. 2023Q4 RMB appreciated by 1.4%, estimated exchange earnings of +490 million. The price of comprehensive domestic oil production in Q4 was 7,607 yuan, -4.7% year over year, up 15.9% month on month.
According to the company's announcement, part of the Q4 loss was dragged down by the strategic investment of Sichuan Airlines.
Operating data:
2023: ASK +105.5% YoY, -8.1% YoY, RPK +141.9% YoY, -13.3% YoY, 78.1% Guest Occupancy Rate, +11.8pct YoY, +11.8pct YoY, -4.7pct YoY.
2023Q4: ASK +192.3% YoY, -3.9% YoY, RPK +251.3% YoY, -6.7% YoY, -6.7% YoY, 79.8% Guest Occupancy Rate, +13.4pct YoY, -2.4pct YoY.
Data for the first day of the Spring Festival travel season was released: According to data from the Ministry of Transport: On the first day of the 1/26 Spring Festival travel season, the passenger volume of civil aviation was 2,066 million, an increase of 24.3% over the same period in 2019. Railway passenger traffic was 11.063 million, an increase of 16.1% over the same period in 2019. According to FlightAI data: 1/26, the number of domestic passengers was 1.86 million, +25% compared to the first day of '19, the passenger occupancy rate was +1.8pct. The domestic fuel ticket price was +19% compared to the first day of '19, the bare ticket price was +13%, and the cross-border passenger rate recovered to 64%.
Investment advice: The spring season is expected to start. Earlier, according to the Civil Aviation Administration's forecast, the number of passengers carried by civil aviation during the Spring Festival travel season will reach 80 million, an average of 2 million passengers per day, which is expected to reach a record high. This forecast figure is an increase of about 10% compared to the actual number in '19, and an increase of over 40% over the Spring Festival travel season in '23. In the context of optimism about the aviation cycle logic, we expect the start of the Spring Festival travel season to correct aviation sentiment. We believe that this data forecast will change the excessive pessimism in the market due to off-season extradition. In terms of distribution, the 24-year Spring Festival travel season had a four-year backlog of domestic demand for returning home, a multi-point urban cultural tourism culture, more relaxed departure preparation plans, and more international flight recovery rates. The supply and demand structure will support volume and price performance. 1) Profit forecast: Considering the domestic macroeconomic background and the progress of international recovery, we adjusted our profit forecasts for 23-25 to be estimated to achieve net profit of 4.2 billion, 8.1 billion, and 12.8 billion, respectively (the original forecast was profit of 160 million, 15.9 billion, and 181 billion yuan). The corresponding EPS for 23-25 was -0.23, 0.45, and 0.71 yuan, respectively, and the 24-25 PE was 14 and 9 times, respectively. 2) We continue to emphasize that 2023 is the base year for the new price mechanism, and it is recommended that the 2024 supply and demand price derivation look at marginal changes on a 23-year basis. Considering that international flights are still in the recovery phase for 24 years, referring to the company's historical average PE and traditional pricing method for cyclical stocks, the profit during the 25-year boom period was 12 times PE, corresponding to a market value of 153.4 billion yuan and a target price of 8.47 yuan. It is expected to maintain the “recommended” rating.
Risk warning: The economy has declined sharply, oil prices have risen sharply, and the exchange rate has depreciated sharply.