Scott: The company released the 2023 full-year results forecast. The company's operating performance in 2023 will turn a loss into a profit. It is expected to turn a loss into a profit of 2.1 billion yuan to 2.4 billion yuan, a decrease of 51.36 billion yuan to 5.436 billion yuan compared to the same period in 2022; net profit after deduction of 2 billion yuan to 2.35 billion yuan, a loss of 51.96 billion yuan to 5,546 billion yuan compared to the same period in 2022. Among them, net profit to mother for the fourth quarter of 2023 is expected to be a loss of 277 million to 577 million yuan.
Travel demand has been fully released, which has led to a significant improvement in the company's main business. The annual passenger turnover was 42.43 billion people kilometers, +87.26%; of these, domestic was 37.18 billion people kilometers, +65.01% year on year; international was 4.67 billion people kilometers, +4602.14% year on year; Hong Kong, Macao and Taiwan regions were 580 million people kilometers, +1986.66% year on year. In 2023, the public's willingness to travel was high, domestic backlog demand was better released, and international and regional routes were steadily restored, leading to a significant improvement in the company's main business and turning losses into profits. Private demand has gradually become the biggest driving force in the air travel market. In particular, during the Spring Festival travel season, summer travel season, Golden Week, and the peak holiday season, it has brought reliable performance stability to the company. The increase in business routes and the recovery in business customers have also brought the company better performance stability.
Capacity investment returned to the growth channel, creating the highest level since the company started sailing. The total fleet size of 2023 increased by 5 A320 series aircraft, and the annual usable seat kilometers reached 47.47 billion passenger kilometers, an increase of 56.4% over 2022, and an increase of 8.6% over 2019. The usable seat kilometers invested in international and regional routes have recovered by more than 40% compared to 2019, and the capacity structure has been effectively improved. The annual passenger occupancy rate reached 89.4%, and the passenger occupancy rate for domestic routes in China returned to more than 90%, reaching 90.3%, achieving high-quality development while growing in scale. In the future, with the continuous optimization of visa and entry and exit policies (such as implementing two-way visa-free visas in Thailand, Malaysia, Singapore and China), the number of inbound and outbound travelers is expected to grow rapidly, driving the company's performance to a new level.
Investment advice: As demand for air travel recovers, the holiday travel boom is driving airline profit recovery. On the revenue side, Spring Airlines is based in Shanghai, and its layout covers all major domestic regions. International routes focus on the Southeast Asian market and radiate the development of the Northeast Asian market; on the cost side, comprehensive cost optimization is achieved through refined cost management. We adjusted Spring Airlines' net profit for 2023-2025 from RMB 25.4/36.7/RMB 4.51 billion to RMB 22.9/32.6/3.98 billion, and PE was 22.4/15.7/12.9 times based on the latest closing price. Maintain the company's “buy” rating.
Risk warning: risk of macroeconomic fluctuations; risk caused by market competition; risk of policy change; risk of air transport industry competition; risk of fluctuations in aviation fuel prices.