Key points of investment
24Q1 reversed losses and net profit of RMB 25 million to mother
In 2023, we achieved operating income of 5.15 billion yuan, +95% year-on-year; net profit to mother - 960 million yuan, a year-on-year loss reduction of about 1 billion yuan. In 24Q1, revenue was 1,616 billion yuan, +55% year-on-year; net profit to mother was 0.25 million yuan, net profit after deducting non-return to mother net profit of 0.15 million yuan, which turned a loss into a profit, mainly due to the steady increase in capacity investment driven by the increase in revenue scale and the continuous increase in passenger occupancy rates.
Operating data: Net increase of 2 aircraft in 24Q1, steady increase in capacity investment
Fleet size: The 24Q1 terminal fleet size is 72, with a net increase of 5 aircraft in 23 and a net increase of 2 aircraft in 24Q1.
ASK: 2023 is up 9.1% from 2019, and 24Q1 is up 48.5% from 19Q1.
RPK: Up 0.5% from 2019 in 2023, 41.5% in 24Q1 compared to 19Q1.
Occupancy rate: The occupancy rate in 2023 was 75.4%, down 5.3 pcts from 2019. The occupancy rate in 24Q1 was 77.0%, down 3.8pct from 19Q1.
Number of passengers carried: 6.409 million passengers in 2023, -17.2% compared to 2019; 24Q1 carried 1.98,000 passengers, +16% compared to 2019.
Profit analysis: Q1 customer revenue per unit was -8.6% year on year. High oil prices put pressure on the revenue side: 1) In 2023, revenue was 5.15 billion yuan, +95% year-on-year, with passenger transport companies' distribution revenue stabilized at around 20%. Revenue per ASK was 0.443 yuan, -9.6% year over year, and revenue per unit RPK was 0.588 yuan, -3.2% year over year. 2) 24Q1, revenue of 1,616 billion yuan, +55% year-on-year. Revenue per unit of ASK was 0.459 yuan, down 12.9% year on year 19Q1; unit revenue of RPK was 0.596 yuan, down 8.6% year on year 19Q1.
Cost side: In 2023, the operating cost per ASK unit was 0.475 yuan, +11% compared to 2019, of which the unit ASK aviation fuel cost was 0.161 yuan, +20% compared to 2019, mainly because the oil price increased by about 38% compared to 2019, and the unit ASK non-fuel cost was 0.314 yuan, +7% compared to 2019, mainly because the utilization rate has not recovered. In 24Q1, the unit ASK operating cost was 0.441 yuan, -4% compared with 2019.
Expense side: In 2023, the company's unit ASK sales expenses and unit ASK management expenses were 0.021 and 0.023 yuan respectively, -3% and +37% compared with the same period in 2019; financial expenses were 590 million yuan, of which exchange losses were about -0.3 billion yuan. In 24Q1, unit ASK sales expenses and unit ASK management expenses were 0.019 yuan and 0.016 yuan, respectively, -9% and -5% compared with the same period in '19.
Other revenue: Other revenue in 2023 was approximately $530 million, including government subsidies of $520 million, +46% year over year, mainly due to increased flight volume. Other revenue for 24Q1 was approximately $250 million, +382% year over year, mainly due to increased government subsidies confirmed in the current period.
Profit forecasting and investment advice
The company's net profit for 24-26 is estimated to be 3.25, 7.20, and 1,167 billion yuan, maintaining a “buy” rating.
Risk warning: demand falls short of expectations, and oil prices and exchange rates fluctuate greatly.