Key points of investment
Hainan Airport 2023 Annual Report: Net profit without return to mother was 470 million yuan, YoY +191% According to Hainan Airport's 2023 annual report, the company's 2023 operating income was 6.76 billion yuan, +44% YoY; net profit to mother was 950 million yuan, -49% YoY; net profit after deducting non-return to mother was 4.7 billion yuan, +191% YoY. The increase in revenue was mainly due to an increase in airport and hotel business revenue due to market recovery, while at the same time, revenue from Haoting Nanyuan C13 and C14 projects was carried over, and real estate revenue increased sharply over the same period last year. Sales expenses of 200 million yuan, +28% year over year, mainly due to increased sales commissions in the real estate business. Financial expenses were approximately $500 million, -17% year over year, mainly due to a year-on-year decrease in the principal amount of interest-bearing debt.
Among them, in 23Q4, the company achieved operating income of 2.23 billion yuan, +27% year-on-year, net profit to mother of 160 million yuan, +10% year-on-year, after deducting net profit of 170 million yuan (-280 million yuan in 22Q4).
Airport business: The number of passengers at Sanya Phoenix Airport reached a record high. It will continue to focus on the main airport business in 2023. The company's airport business revenue was 2.04 billion yuan, +96% year-on-year, and the gross profit margin was 42.5%, mainly due to the recovery in travel. The total passenger throughput of the nine airports controlled and managed by the company in 2023 was 25.46 million passengers, +132% over the same period last year. Among them, the passenger volume at Sanya Phoenix Airport, an important airport subsidiary of the company, reached a record high, with 135,000 flights taking off and landing in 2023, recovering to 109% in 2019. Passenger throughput of 21.78 million passengers recovered to 108% in 2019, and cargo and mail throughput of 95,000 tons recovered to 95% in 2019.
In 2024, the company will continue to focus on the main airport business and optimize the layout of the free trade port route network. In 2024, Sanya Phoenix International Airport aims to add 5 new international routes to the existing overseas operating routes, and open a fifth air rights route and a serial flight route.
Duty-free commercial business: Duty-free sales on the outlying islands of Hainan Province are expected to increase by 10% in 2024. The company is expected to benefit from the company's duty-free and commercial business revenue of 270 million yuan in 2023, -0.6% year-on-year, and a gross profit margin of 89.8%. In 2023, the offline sales of the five outlying island duty-free shops that the company indirectly participated in through equity investment and space leasing were about 7.2 billion yuan, accounting for about 16% of the duty-free sales of 12 duty-free shops in Hainan Island. According to Haikou Customs data, Haikou Customs supervised a total of 43.76 billion yuan in duty-free sales on the outlying islands in 2023, an increase of 25.4% over the previous year, and 6.756 million duty-free purchases, an increase of 59.9% over the previous year. Duty-free shopping was 51.3 million items, up 3.8% year on year. The corresponding customer unit price was 6,477 yuan, down 22% year on year.
As a deep participant in the outlying islands duty-free market, the company is expected to benefit from increased duty-free sales on the outlying islands in the future. The 2024 report on the work of the Hainan Provincial People's Government suggests that in terms of stimulating consumption potential, polish the outlying islands tax-free sign and create competitive advantages in variety, price, and service, and the sales volume of duty-free shops on the outlying islands will increase by 10%.
Real estate and property management business: Continuing to accelerate the development and construction of real estate stock projects in 2023, the company's real estate business revenue was 3.0 billion yuan, +45% compared to the same period, with a gross profit margin of 60%. The sharp increase in revenue was mainly due to the carry-over of revenue from Haoting Nanyuan C13 and C14 projects. Property management business revenue was 690 million yuan, -2.6% year-on-year, with a gross profit margin of 16.3%.
Profit forecasting
We expect the company's net profit to be 1.21 billion yuan, 14.1 billion yuan, and 1.59 billion yuan respectively in 2024-2026, maintaining the “increase in holdings” rating.
Risk warning
Passenger traffic falls short of expectations, business development falls short of expectations, etc.