Key points of investment
Juneyao Airlines made a profit of 750 million yuan in 2023, of which Q4 lost 380 million yuan. In 2023, the company achieved operating income of 20.096 billion yuan, +144.76% year-on-year; net profit to mother was 751 million yuan, +118.11% year-on-year. Among them, in 23Q4, the company achieved operating income of 4.216 billion yuan, +144.78% year-on-year, net profit to mother - 382 million yuan, and losses narrowed year-on-year to 793 million yuan.
Operating data: The Q4 passenger occupancy rate has basically recovered to the same period in 2024. According to the company's announcement, the company's ASK and RPK in 2023 were +17% and +14% compared to 19, respectively, and the passenger occupancy rate was 82.8%, -2.4 pct year on year 19, and the daily utilization rate of usable aircraft was 10.34 hours (10.67 hours in 2019). Among them, 23Q4, ASK, and RPK were +16% and +16%, respectively, and the occupancy rate was 83%, and -0.1 pct compared to '19.
In terms of fleet size, the company had 117 aircraft at the end of 2023, a net increase of 7 for the year. Looking ahead to 2024, the company plans a net increase of 12 aircraft, or 129 aircraft by the end of 2024, or +10.26% over the same period last year.
In 2025-2026, the company plans to introduce 1 and 6 aircraft respectively.
Profit analysis: Unit RPK revenue in 23 increased 6% compared to 2019, and unit fuel costs were dragged down by high fuel prices. Revenue side: 1) The company's revenue in 2023 was 20.096 billion yuan, +20% year on year 19. The corresponding unit ASK revenue and unit RPK revenue were 0.421 and 0.508 yuan respectively, +3% and +6% compared with 19 years. 2) The 23Q4 company's revenue was 4.216 billion yuan, +13% year on year. The corresponding unit ASK revenue and unit RPK revenue were 0.358 yuan and 0.432 yuan respectively, -3% and -3% year on year 19.
Cost side: In 2023, the operating cost of the company's unit ASK was 0.361 yuan, +2% compared to 2019; among them, the fuel cost per ASK unit and the non-oil cost per ASK were 0.133 and 0.228 yuan, respectively, +30% and -9% compared to 2019, mainly because oil prices were high. The average price of aviation kerosene in 2023 was about 6,808 yuan/ton, +38% compared to 2019.
Expense side: In 2023, the company's unit ASK sales expenses and unit ASK management expenses were 0.015 yuan and 0.011 yuan, respectively; the financial expenses were about 1.5 billion yuan, of which the net exchange loss was about 136 million yuan, mainly due to the depreciation of RMB 1.7% at the end of 2023 compared to the end of 2022. According to the 2023 annual report, assuming that risk variables other than the exchange rate remain unchanged, and changes in the exchange rate of RMB against the US dollar cause the RMB to appreciate (or depreciate) by 1%, the company will reduce (or increase) net profit by about RMB 80 million.
Jiuyuan Airlines: In 2023, Jiuyuan Airlines, a wholly-owned subsidiary of the company, turned a loss into a profit, achieving operating income of 3.65 billion yuan and net profit of about 260 million yuan (loss of 670 million yuan in 2022)? The number of civil aviation passengers in 2024 is expected to exceed 4.6% in 2019, and the company's performance is expected to grow positively year on year and the international market continues to recover. We believe that airline performance is expected to achieve positive year-on-year growth in 2024.
1) Continued resumption of international flights will drive the recovery of aircraft utilization, help dilute fixed costs, reduce supply pressure in the domestic market, and facilitate the release of airline performance.
2) In 2024, the airline may enjoy the full ticket price increase bonus for the first time. Since 2018, there have been too many rounds of price increases in full ticket prices, and the driving effect of the rising fare ceiling on airline performance was not clearly reflected in the unstructured demand environment in the past few years. We believe that the airline will clearly enjoy the dividends of price increases in 2024 or for the first time, and the airline's profit center is expected to continue to rise in the long run.
3) Boeing and Airbus are facing quality issues and supply chain bottlenecks. The delivery pace falls short of expectations, aviation supply-side constraints continue to be tightened, and the “14th Five-Year Plan” supply growth rate declines definitively. The demand side is expected to maintain the boom, and supply and demand are poor or continue to accumulate. At the 2024 National Civil Aviation Work Conference, the Civil Aviation Administration stated that it will strive to complete 690 million passenger traffic in 2024, an increase of 11% over the previous year and an increase of 4.6% over the previous year.
Investment advice
The company's net profit for 24-26 is estimated to be about 1.59 billion yuan, 20.2 billion yuan, and 2.23 billion yuan, respectively, maintaining a “buy” rating.
Risk warning:
Demand recovery falls short of expectations, and there is a risk of large fluctuations in oil prices and exchange rates.