Key points of investment
Incident: On April 18, 2024, Hainan Airport released its 2023 annual report. The company achieved revenue of 6.762 billion yuan for the full year of 2023, +44% year over year; net profit to mother was 953 million yuan, -49% year over year; net profit after deducting non-return to mother turned a loss of 467 million yuan.
Net profit without return to mother exceeded the upper limit of the forecast: Q4 revenue in 2023 was 2,225 million yuan, +27% year over year; net profit to mother was 163 million yuan, +10% year over year; net profit after deduction of non-return to mother was -165 million yuan, +42% year over year. The sharp recovery of airport business in 2023 and the elimination of real estate stocks led to a significant increase in revenue, and net profit deducted from non-return to mother exceeded the upper limit of the forecast range. Q4 The company's gross margin was 57%, the cost was relatively fixed, and the gross margin continued to increase, +11pct month-on-month; the Q4 sales, management and finance rate was 20%, -10% month-on-month, and the net margin to mother was 7%.
The company's participation in relevant duty-free shops accounted for 16% of the island's duty-free sales for the full year of 2023:
In 2023, the company's airport/duty-free and commercial/real estate/property management/other businesses achieved revenue of 20.45/2.68/30.05/6.94/750 million yuan respectively, +96%/-1%/+45%/-3%/+25% over the same period last year. In 2023, the take-off and landing cases/passenger throughput of Sanya Phoenix Airport was 134,700 sorties/21.7758 million passengers, +9%/8% compared with the same period in 2019. The company participated in 5 outlying island duty-free shops through equity investment and space leasing. The total offline sales volume in 2023 was about 7.2 billion yuan, accounting for about 16% of the duty-free sales of 12 duty-free shops in Hainan Island.
Travel to the island remains strong: According to monthly production and operation data disclosed by the company, the passenger throughput of Sanya Phoenix Airport in Q1 2024 was 214.69/204.54/2.031 million passengers, respectively, of which the January data reached a record high. Overall passenger throughput/take-off and landing at Sanya Airport in Q1 was 6.424,600 passengers/33,900 flights, respectively, +4%/-6% compared to the same period in 2019, and +4%/-1% compared to the same period in 2019. Travel to the island remained high. In 2024, the company will focus on the main airport business. Sanya Airport is expected to add 5 new international routes, and a fifth air rights route and multiple flight routes.
Profit forecast and investment rating: After integrating into Hainan's state-owned assets, Hainan Airport began high-quality development and participated deeply in the construction of the Hainan Free Trade Port. It is expected that it will continue to enjoy the prosperity of Hainan's island travel and future commercial port policy dividends. Based on the latest financial data, adjusted profit forecasts for Hainan Airport for 2024/2025 and the addition of 2026, net profit due to mother for 2024-2026 was RMB 14.6/18.1/222 billion (the value before 2024/2025 was RMB 15.1/1.79 billion), corresponding to PE valuation of 26/21/17 times, maintaining the “increase” rating.
Risk warning: macroeconomic risks, risks that the construction of the Hainan Free Trade Port will fall short of expectations