Event: In 2023, the company achieved revenue of 11.05 billion yuan, an increase of 101.6% over the previous year. Achieved net profit of 829 million yuan after deduction, turning a loss into a profit compared to last year's loss of 3,076 billion yuan. In the four quarters of last year, the company's net profit after deduction was -101 million, 208 million, 348 million, and 373 million, respectively. Profits increased quarterly with the recovery of the aviation industry, especially international routes.
The recovery in passenger traffic led to a significant increase in aviation revenue: passenger throughput at Pudong Airport recovered to 54.48 million passengers in 2023, 71.5% of 76.15 million passengers in 2019. Passenger throughput within China has already surpassed 2019, and passenger volume on international routes was 38.6% of the same period in '19. The number of international passengers continued to pick up last year. In January-January '24, the number of international passengers at Pudong Airport was equivalent to 71.2% and 85.4% respectively in the same period in '19, so it is certain that the company's revenue related to international travelers will increase significantly in '24 compared to '23.
The company's aviation revenue in '23 was 4.376 billion yuan, a sharp increase of 140.2% over '22. Among them, revenue related to flights increased 74.8%, while passenger revenue increased 245.7% year on year. There is a big difference in the increase between the two. On the one hand, the airport opened additional cargo flights during the pandemic to make up for losses caused by insufficient passenger flights, and on the other hand, because the overall passenger occupancy rate for flights in '23 was higher than in '22.
Tax-free revenue achieved high growth, but there are certain difficulties in returning to the 19-year high: the company's non-aviation revenue was 6.671 billion yuan during the reporting period, an increase of 82.3% over the previous year. Among them, commercial catering revenue was 2,431 billion yuan, an increase of 334.0% year-on-year, mainly due to a sharp increase in duty-free revenue. Revenue from logistics services and other non-aviation revenues increased by 8.5% and 59.3%, respectively.
The company's tax-free revenue during the reporting period was 1,788 billion yuan, a significant increase from 363 million yuan in '22, but there is still a big gap compared to 5.21 billion yuan in the same period in '19. Considering that the comprehensive sales commission ratio of the tax exemption agreement in '19 was as high as 42.5%, and in the new agreement signed in December last year, the overall increase ratio was lower than in '19. We expect this year, as the number of passengers on international routes increases dramatically, the company's duty-free revenue will continue to increase significantly compared to '23, but in the short term, it is difficult to return to the 19-year high level.
Profit forecast and investment rating: With the increase in capacity utilization and the resumption of non-aviation businesses such as duty-free business and advertising, the company's performance is expected to pick up rapidly in the next two years. We expect the company's net profit for 2024-2026 to be RMB 23.4, 34.8, and RMB 3.97 billion, respectively, and corresponding EPS of 0.94, 1.40, and 1.60 yuan, respectively, maintaining the company's “recommended” rating.
Risk warning: International flight restoration progress falls short of expectations, policy changes