China Airlines Reveals 2023 Annual Report Forecast
Huaxia Airlines announced its 2023 annual report forecast. The company's net profit for the whole year is estimated to be -1.2 billion yuan to -9.3 billion yuan, and the median performance forecast is -1,065 billion yuan, a year-on-year reduction in losses. According to the annual report forecast, the company's net profit for the fourth quarter was about -50 billion yuan to -230 million yuan.
The industry's traditional low season in the fourth quarter, and the performance was basically in line with expectations
The fourth quarter was a low season for traditional civil aviation, and the operation of the civil aviation market was lackluster. According to accurate data from China Airlines, the number of domestic passenger flights in the fourth quarter was 1.08,000, down 12.7% from the third quarter, but Huaxia Airlines operated 26,000 flights in the fourth quarter of 2023, an increase of 4.1% over the third quarter, indicating that the company's aircraft utilization efficiency is still continuing to recover.
Looking at the full year, the company's ASK was 11.62 billion, up 93.1% year on year, RPK 8.76 billion, up 128.3% year on year, passenger occupancy rate 75.36%, up 11.63 pct year on year. However, due to the fact that the overall recovery of the regional aviation market was slower than the main line market and the efficiency of the company's fleet utilization did not fully recover, losses were inevitable, and the annual results were basically in line with expectations.
The market is picking up, efficiency is improving, and the company is expected to resume profits in 2024. We believe that the civil aviation market is expected to continue to recover in 2024, the repair of international routes will absorb excess capacity and drive further warming in the domestic market. At the same time, the company's fleet utilization efficiency is expected to continue to improve, reducing fixed unit costs, and revisions to regional aviation management measures are expected to have a positive impact on the company's other earnings. It is expected that the company will return to the profit range in 2024.
Investment advice
We expect the company's net profit to be -1.06 billion yuan, 200 million yuan, and 70 billion yuan in 2023-2025. Recently, the company's stock price has been significantly adjusted. Based on the closing price of February 5, 2024, the company's PB valuation was only 1.87 times, which is the lowest among A-share listed airlines. The stock price may have shown a comparative advantage, and the rating was raised to “buy.”
Risk warning:
Macroeconomic decline, sharp fluctuations in oil prices and exchange rates, and security incidents.