The company announced its 2023 annual report and 2024 quarterly report: 23Q4 lost 268 million; 24Q1 reversed loss of 25 million yuan. 1) 2023: Revenue of 5.15 billion, up 94.9% year on year, compared to -4.7% in '19, loss of 960 million (loss of 1.97 billion in the same period in '22), loss of 960 million after deduction, RMB 1.7% depreciation in 2023, and exchange loss of 0.3 billion yuan. 2) 23Q4: Revenue of $1.30 billion, up 111.0% year over year, -5.4%; loss of 270 million yuan (loss of 460 million in the same period in '22), net loss of 260 million yuan, depreciation of RMB 0.2% in 23Q4, estimated exchange earnings of 80 million yuan. 3) 24Q1: Revenue of 1.62 billion, up 54.7% year on year, +29.3%; profit of 25 million yuan (loss of 280 million in the same period in '23), deducting non-profit of 15 million yuan, depreciation of RMB 0.2% in 24Q1, and exchange loss of 0.2 billion yuan. 4) Other revenue: Total revenue in 2023 was 530 million, +46.8% YoY; 23Q4 achieved 250 million yuan, +24.3% YoY. 24Q1 reached 250 million yuan, +382.4% over the same period. Other revenue increased significantly. The announcement revealed mainly the increase in government subsidies confirmed in the current period. 5) Credit impairment losses: -92 million for the full year of 2023 and +023 million for 24Q1. This is a preparation for bad debts in response to receipts in the current period.
Operating data: 1) 2023: ASK +93.1% YoY, +5.3% YoY, RPK +128.3% YoY, -1.6% YoY, 75.4% occupancy rate, +11.6pct YoY, +11.6pct YoY, and -5.3pct YoY. 2) 23Q4: ASK +163.5% YoY, +9.1% YoY, RPK +275.7% YoY, +0.5% YoY, +0.5% YoY, 74.5% Guest Occupancy Rate, +22.3pct YoY, +6.4pct YoY. 3) 24Q1: ASK +48.6% YoY, +48.5% YoY over Year 19, RPK +62.0% YoY, +41.5% YoY +41.5%, Guest Occupancy Rate 77.0%, +6.4pct YoY, +3.8pct YoY. 4) Flight volume: According to flight manager statistics, the average number of daily flights in 23Q4 was 284, +166.8% year on year, -11.1% compared with year 19; the average number of daily flights in 24Q1 was 301, +50.4% over the same period last year, +5.3% compared to 2019. 5) Fleet introduction: At the end of 2023, the company's operating fleet reached 70 aircraft, 2024Q1 introduced two Airbus 320s, and reached 72 at the end of the first quarter.
Revenue level: 1) 2023 passenger kilometer revenue (including fuel surcharges) was 0.56 yuan, -13.0% year-on-year, -6.1% compared to the same period in '19, and 0.42 yuan per seat kilometer, +2.8% year-on-year, and -12.2% compared to '19. 2) The estimated 23Q4 passenger kilometer revenue was 0.50 yuan, -40.3% year over year, -8.2% compared with the same period in '19, and seat kilometer revenue of 0.38 yuan, -14.9% year-on-year, and -15.4% compared with the same period in '19. 3) 24Q1 passenger kilometer revenue was 0.56 yuan, -4.5% year-on-year, -12.7% compared to the same period in '19, and seat kilometer revenue was 0.43 yuan, +4.1% year-on-year, and -16.8% compared to the same period in '19.
Costs and expenses: 1) 2023 operating costs of 5.51 billion yuan, +41.4% year over year, seat kilometer cost 0.47 yuan, -26.8% year over year, +11.1% compared to 2019. 23Q4 operating costs were 1.53 billion yuan, +58.5% year on year, and seat kilometer cost was 0.47 yuan, -39.9% year over year, +6.2%. The 24Q1 operating cost was 1.55 billion yuan, +26.7% year on year, and the seat-kilometer cost was 0.44 yuan, -14.7% year-on-year, and -3.8% compared to '19. 2) Expenses: The total of the three fees in 2023 (deduction) is $1,067 million, and the deduction rate is 20.7%. The total deduction fee for 23Q4 was 293 million, and the three deduction rate was 22.6%. The total deduction fee for 24Q1 is 273 million, and the deduction rate for the three remittance fees is 16.9% (excluding R&D expenses).
We continue to be optimistic about the regional aviation market space and the company's unique business model. 1) Regional aviation: The blue ocean market has huge potential. 2) Revision of the branch line subsidy measures, and the company expects core benefits: In January 2024, the Ministry of Finance and the Civil Aviation Administration issued the “Notice on Revising the Interim Measures on the Administration of Regional Aviation Subsidies”. The scope of subsidies was more focused, and subsidies for routes operated by regional aircraft were increased. 24Q1 The company's other revenue increased markedly, mainly contributing to government subsidies; 3) Company advantages: a) Leading market segment size: covering half of domestic regional destinations, with independent flight routes accounting for a high proportion. b) Under normalization: The company has both growth and stability. c) First-mover advantage, operational advantage, and innovative model jointly build core barriers.
Investment advice: 1) Profit forecast: Considering the macro background, oil prices, and the recovery of the company's flight volume after the previous report, we slightly adjusted the 24-25 profit forecast to achieve net profit of 550 million yuan and 9.1 billion yuan (the original forecast was 60 billion yuan and 1.06 billion yuan), and also introduced a 26-year profit forecast to achieve an estimated net profit of 1.32 billion yuan, corresponding to 24-26 EPS of 0.44, 0.71, and 1.03 yuan, respectively. 2) Investment advice: We believe that the company has reached a long-term inflection point. With the adjustment of the branch subsidy policy, the company is expected to benefit from the core benefits as a branch leader, and is currently at the bottom of valuation, and is expected to return to the logic of growth. Maintain the original valuation method, refer to the company's past PE and annualized growth rate, and give 18 times PE in 24 years, with a target market value of 10.1 billion yuan and a target price of 7.9 yuan, 30% of the current space, with an emphasis on a “strong push” rating.
Risk warning: The economy has declined sharply, the RMB has depreciated sharply, and oil prices have risen sharply.