The company announced its 2023 annual report: loss to mother of 8.17 billion yuan in 2023, loss of 5.56 billion yuan to mother in 23Q4? 1. Financial data: In 2023, the mother lost 8.17 billion yuan, and Q4 lost 5.56 billion yuan. 1) 2023 full year:
Revenue of 113.74 billion yuan, +146.7% year over year, compared to -5.9% in '19, loss to mother of 8.17 billion (loss of 37.39 billion yuan for the same period in '22), loss after deduction of 8.94 billion yuan, depreciation of RMB 1.7% for the whole year, and exchange losses of 90 billion yuan.
2) 2023Q4: Revenue of 28.20 billion yuan, +169.8% year over year; loss to mother of 5.56 billion (22Q4 loss of 9.27 billion yuan), after deducting non-loss of 5.74 billion yuan, RMB 1.4% appreciation in Q4, estimated exchange earnings of 200 million yuan.
2. Operating data: 1) 2023: ASK +154.6% YoY, -9.4% YoY, RPK +197.5% YoY, -17.8% YoY, 74.4% Guest Occupancy Rate, +10.7pct YoY, +10.7pct YoY, -7.6pct YoY. 2) 23Q4: ASK +235.0% YoY, -3.0% YoY, RPK +296.2% YoY, -7.9% YoY, 76.4% Guest Occupancy Rate, +11.8pct YoY, +11.8pct YoY, -4.1pct YoY.
3. Revenue level: Annual passenger kilometer revenue exceeded 13.6% in 2019. 1) Passenger kilometer revenue in 2023 (including fuel surcharges, including partner routes) was 0.59 yuan, -1.5% year over year, +13.6% compared with the same period in '19, and seat kilometer revenue of 0.44 yuan, +15.1% year over year, and +3.0% compared to '19. 2) 2023Q4 passenger kilometer revenue was 0.49 yuan, -18.3% year-on-year, up 10.4% from the same period in 2019, and seat kilometer revenue was 0.38 yuan, -3.3% year-on-year, and +4.8% over the same period in '19.
4. Costs and expenses: 1) Operating costs in 2023 were 112.5 billion yuan, +50.8% year on year, aviation fuel costs were 41.1 billion yuan, up 84.9% year on year, and domestic oil price comprehensive production costs were -9.6% year over year. The cost of withholding oil was 71.4 billion, +36.3% YoY. The cost of seat-kilometer was 0.459 yuan, or -40.8% year-on-year, up 15.7% from '19; the cost of withholding fuel per kilometer was 0.291 yuan, or -46.5% year-on-year, +7.8% compared to '19. 2) The operating cost of the 2023Q4 was 31.5 billion yuan, +72.4% year over year, estimated fuel cost of 11.7 billion yuan, +127.5% year over year, seat kilometer cost 0.474 yuan, 48.5% year over year, +18.3% compared to 19 years, and 0.298 yuan per seat kilometer, or -54.9% year over year. 3) Expenses: The total of the three fees in 2023 (deduction) was 13.45 billion, +16.4% year-on-year, and the deduction rate was 11.8%. Q4 The total three deduction fees were 3.39 billion, +64.1% compared to the same period last year, and the deduction three fee rate was 12.0% (Note:
R&D expenses not included).
5. Fleet introduction: The expected net increase in 24-26 is 41, 11, and 34 aircraft, respectively, corresponding to growth rates of 5.2%, 1.3%, and 4.1%.
Investment advice: The 2024 peak season started well. According to data from China Civil Aviation Network, from January to February, civil aviation completed a cumulative total of 120 million passengers, an increase of 44.4% over the same period in 2019. Among them, international routes completed 9262,000 passenger traffic, an increase of 706.6% over the previous year, and recovered to 76.8% in the same period in 2019. The industry transitioned to the normal season in March. We expect the number of public and business travelers to gradually pick up in the future, and the Qingming holiday in early April is expected to boost private demand. 1) Profit forecast: Based on changes in the domestic macroeconomic background after the previous report, and considering the progress of international recovery, we adjusted our 24-25 profit forecasts to the estimated net profit of 5.3 billion yuan and 8.5 billion yuan (previous value was 14.7 billion/16.2 billion), respectively. At the same time, we introduced the 2026 profit forecast to achieve an estimated net profit of 12.3 billion yuan. The corresponding 24-26 EPS was 0.24, 0.38, and 0.55 yuan, respectively, and 24-26 PE was 15, 10, and 7 times, respectively. 2) We continue to emphasize that 2023 is the base year for the new price mechanism. It is recommended that the 2024 supply and demand price derivation be based on marginal changes on a 23-year basis. Plans for more relaxed departure preparation in 24 years and more international flight recovery rates will support the supply and demand structure. Considering that international flights are still recovering 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 is 12 times PE, corresponding to a market value of 102.3 billion dollars and a target price of 4.59 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.