China Eastern Airlines released its 2023 performance forecast on January 30, 2024:
The company expects a net loss due to mother of 6.8 billion yuan to 8.3 billion yuan in 2023, a decrease of 291-30.6 billion yuan compared to the same period in 2022; the net loss of non-deducted net loss for 2023 is between 7.5 billion yuan and 8.9 billion yuan, a decrease of 291-30.5 billion yuan over the same period in 2022.
In the first three quarters of 2023, the company achieved a net loss of 2,707 billion yuan, and the estimated net loss due to mother was 4.19 billion yuan to 5.69 billion yuan in the fourth quarter of 2023; the company achieved a net loss of 3.201 billion yuan without deduction in the first three quarters of 2023, and the estimated net loss of the company's deducted non-return to mother was 4.3 billion yuan to 5.7 billion yuan in the fourth quarter of 2023.
In 2023, the aviation market gradually recovered, but due to factors such as slow recovery of international flights, increased domestic supply, and weak business travel, the company's performance declined sharply compared to 2022, but it still lost money. The specific performance of the company's operations in 2023 is as follows:
Net increase of 7 aircraft in 2023. By the end of December 2023, the company operated 782 airliners (excluding business jets), a net increase of 7 over the end of 2022.
Domestic production recovered faster than international and regional production in 2023. In 2023, the company's usable seat kilometers (ASK) and passenger turnover (RPK) recovered to 91% and 82% of the same period in 2019, respectively. Domestic routes ASK and RPK recovered relatively quickly, to 116% and 105% in the same period in 2019, respectively. International routes ASK and RPK recovered to 44% and 39% respectively in the same period in 2019, while regional routes recovered to 75% and 70% of the same period in 2019, respectively. The company's average occupancy rate in 2023 was 74%, which is still lower than 7.6pct in the same period in 2019.
Profit forecast and investment rating: The company's performance in 2023 has improved significantly compared to 2022. We adjusted our previous forecast for the company's 2023-2025 performance. The company's net profit for 2023-2025 is estimated to be -72/67/127 billion yuan (previous value: -39/67/127 billion yuan), respectively, and the corresponding PE/ is -11.9X/12.7X/6.7X, respectively. It is expected that the industry pattern will continue to improve in 2024-2025. The company is the two largest carriers in Shanghai, and the advantages of interflight routes between first-tier cities are obvious. As international routes continue to resume, the company's aircraft utilization rate is expected to continue to increase, thereby diluting fixed costs, driving performance growth, and maintaining a “buy” rating.
Risk warning events: macroeconomic downturn risk, risk of rising oil prices, risk of exchange rate fluctuations.