① How are aviation stocks operating recently? ② Why is Air China leading the increase?
Financial Services Association, April 18 (Editor: Hu Jiarong) Benefiting from the continued recovery of the civil aviation industry, Hong Kong aviation stocks strengthened across the board today. As of press release, Meilan Airport (00357.HK) rose 9.64%, Air China (00753.HK) rose 4.95%, China Southern Airlines shares (01055.HK) rose 4.65%, and China Eastern Airlines shares (00670.HK) rose 3.80%.
Note: Airline stock performance
According to data recently released by the Civil Aviation Administration of China, the entire industry's passenger traffic reached 54.73 million in March, an increase of 25.7% over the previous year, and an increase of 7.3% compared with the same period in 2019. At the same time, cargo and mail traffic also reached 708,000 tons, an increase of 28.2% year-on-year, and an increase of 12.3% compared with the same period in 2019.
In addition, several airlines have recently released operating data for March. According to statistics, the overall passenger occupancy rate of China's six airlines was 81.4%, down 1.4 percentage points from the same period in 2019. Specifically, the passenger occupancy rate for domestic routes is 82.0%. Although it is lower than the Spring Festival travel season in February, it is still higher than 81.3% in January. Meanwhile, the passenger occupancy rate for international routes was 80.1%, up 0.7 percentage points from the same period in 2019. This is the first year-on-year increase since the pandemic. CICC believes that a stable passenger occupancy rate is a prerequisite for the resumption of international routes and is expected to support an increase in international flights.
Dongxing Securities said that the civil aviation industry is at a critical stage of recovery from the bottom. Strong performance during the Spring Festival travel season indicates a substantial recovery in demand for civil aviation. However, there is still an oversupply situation of domestic routes during the off-season, and it is necessary to absorb this excess capacity by resuming international routes. After the aviation season changes, international long-haul routes are expected to resume at an accelerated pace, and improvements in industry fundamentals are expected. The profit performance of the civil aviation industry this year is expected to be significantly better than last year. After a sharp decline over the past year, several major airline companies' stock price safety margins are highlighted, which is worth focusing on.
Haitong International believes that in the short term, strong demand for individual travel on holidays will drive a clear rebound in demand in the travel chain. However, lackluster business travel in the off-season may slow down the overall recovery. In the long run, there is a high possibility that the capacity introduction growth rate of China's airlines will slow down; as travel confidence continues to recover, I am optimistic that the long-term investment logic of the aviation industry will not change in the future (that is, an improvement in the supply and demand pattern, and the marketization of ticket prices), and we expect economic recovery.
Agencies expect Air China's stock price to rise in the short term
Judging from the intraday trend, Air China had the highest increase. Citibank pointed out today that Air China began a 30-day upward catalytic observation. They pointed out that the May 1st Labor Day holiday is approaching. Platform data shows that domestic ticket pre-sales from May 1 to 5 increased 21% year-on-year, up 41% from the same period in 2019. The average economy class ticket price was 1,040 yuan, down about 3% year over year, but it is still 40% higher than the same period in 2019, 80% higher than the Ching Ming Festival holiday this year.
Citigroup expects Air China to benefit from its leading position in the industry. At the same time, it is predicted that the domestic passenger load rate will increase. At the same time, it has a certain share advantage in the outbound travel market, especially the China-Europe route market. The stock price will respond positively, giving it a “buy” rating, with a target price of HK$7.1.