Incident: In 2023, the company achieved revenue of 4.559 billion yuan, up 104.3% year on year, including aviation revenue of 2,097 billion yuan, up 195.0% year on year, and non-aviation revenue of 2,462 billion yuan, up 61.9% year on year. The company's net loss after tax was $1,697 million, down 51.9% from $3,527 billion in the same period last year.
The recovery in throughput led to revenue growth for aviation and non-aviation: the company's passenger throughput in '23 was 52.88 million passengers, equivalent to 53.0% in the same period in '19; its domestic routes (excluding Hong Kong, Macao and Taiwan) had a year-on-year increase of 269.0%, equivalent to 62.7% in the same period in '19, and 6.18 million international flights, up 2359.6% year-on-year, equivalent to 25.8% in the same period in '19. Considering the diversion impact of Daxing Airport, we believe that domestic passenger throughput at Capital Airport has recovered relatively well, and the subsequent growth rate will slow significantly.
From January to January of this year, the number of international passengers at Capital Airport was equivalent to 43.4% and 49.5% of the same period in '19, respectively, so international throughput is expected to increase significantly this year compared to last year.
Increased throughput directly drives up the company's revenue. The company's aviation revenue increased 195% year on year during the reporting period. Among them, revenue related to take-off and landing increased 131.4%, and passenger service revenue increased 345.5% year on year. In terms of revenue from African aviation, revenue increased 61.9% year over year during the reporting period, of which franchise revenue increased 107.2% year over year, and tax-free (retail) revenue, which received more attention, rose to 465 million from 81 million last year. However, considering the recovery of duty-free commerce and the large gap in the number of visitors, duty-free revenue is still far from the 3,586 billion yuan in 2019. We expect the company's duty-free revenue to increase significantly this year, and drive the company's loss reduction, but factors such as the diversion at Daxing Airport have determined that it will be difficult for the company's duty-free revenue to return to a high point in the short term.
The cost side is relatively rigid, and cost control is effective: the company's total operating costs in 2023 amounted to 5.913 billion yuan, an increase of 2.1% over the previous year. If the impact of franchise management fees, which increased at the same time as franchise revenue (up 152.6% year over year), costs decreased by 1.4% year on year, and the cost control effect was obvious. The company's ability to reduce costs with a sharp increase in throughput also has a certain relationship with the decline in epidemic prevention costs after the epidemic is over. The company's security and sanitation expenses all fell year-on-year during the reporting period.
The status of an international hub has not changed, and the duty-free business is still flexible: Capital Airport is clearly being diverted from Daxing Airport, but this is an opportunity to adjust the route and passenger structure in the long run. Since Daxing Airport undertakes a large number of domestic passenger transportation functions, the surplus production capacity of Capital Airport after being diverted may be more biased towards the expansion of international routes, and the status of an international hub will not change. Although at present, it is difficult for the company's tax exempt business revenue to return to its peak, the company's profit situation will continue to recover as throughput recovers and flight structure improves.
Profit forecast and rating: We estimate the company's net profit for 24-26 to be -373 million, 355 million and 876 million yuan, respectively. The company has strong profit flexibility, its position as an international hub is unshakable, and has excellent commercial value, so we maintain the company's “recommended” rating.
Risk warning: demand recovery falls short of expectations; duty-free sales fall short of expectations; cost growth exceeds expectations.