CITIC Haizhi announced its results for the first quarter of 2024. In the first quarter of 2024, it achieved operating income of 450 million yuan, an increase of 13.0% over the previous year, and achieved net profit of 80 million yuan to mother, an increase of 21.7% over the previous year.
The company's profit increased significantly in the first quarter, reaching a record high for the same period in history. 1) In terms of revenue and gross profit: In 2024Q1, the company achieved operating income of 450 million yuan, a year-on-year increase of 13.0%, a year-on-year increase of 90 million yuan, a year-on-year increase of 45.3%, gross margin of 19.6%, an increase of 4.4 pcts over the previous year, and achieved a net interest rate of 18.3% to mother, an increase of 1.3 pcts over the previous year. 2) In terms of costs and expenses: 2024Q1's operating costs were 370 million yuan, up 7.2% year on year, up 7.8% year on year, up 2.2 pcts year on year. Among them, the sales expenses rate was 0.4%, down 0.1 pcts year on year, management expenses rate was 6.2%, the same year on year, and the financial expenses ratio was 0.9%, up 2.4 pcts year on year, mainly due to the year-on-year decrease in interest income and exchange income during the reporting period. The R&D expense ratio was 0.2%, down 0.4 pcts year on year. 3) In terms of cash flow: 2024Q1's net operating cash flow was 420 million yuan, up 104.8% year on year. Cash flow increased significantly, mainly due to good repayment conditions from offshore petroleum and other businesses, and a year-on-year decrease in aviation materials and guarantee fees settled during the reporting period.
Leading general aviation operators will continue to diversify their business structures and are expected to benefit from the wave of low-altitude economic development. CITIC Haizhi has the largest civilian helicopter fleet in Asia. It has been deeply involved in the field of general aviation operations for many years and has sufficient operating experience. The company continues to develop in the five major business sectors of offshore petroleum, emergency rescue, navigation maintenance, offshore wind power and onshore navigation. At the same time, it has pioneered new ways of cargo travel with land navigation, explored the second curve on the basis of stabilizing the basic market of the main business, and launched sightseeing and short-distance transportation services (Shenzhen intercity sightseeing, Shenzhen-Jinsha Bay flights, etc.) Germany's Lilium signs memorandum of understanding to establish eVTOL in the Greater Bay Area The operating network plans to provide more services in Hainan Island and Tianjin in the future. Under the major development of the low-altitude economy, it is expected that efforts will be made to achieve a comprehensive operation management system integrating manned and unmanned personnel, integrating helicopters and fixed wings, and integrating operation, security, and finance.
Investment advice. Judging from the current evolution of the low-altitude economy, under the impetus of policies, along with the deepening of airspace reform, exploration of collaborative management models between military and civilian parties, and gradual improvement of infrastructure, there is great potential for long-term low-altitude development. According to the Civil Aviation Administration, the market size of China's low-altitude economy is expected to reach 1.5 trillion yuan by 2025, and is expected to reach 3.5 trillion yuan by 2035. As a leading enterprise on the operating side, the company has gradually participated in the exploration and construction of the operating network. We expect the company's net profit to be 2.9/3.4/390 million yuan in 24-26, up 23%/15% year-on-year respectively, corresponding to PE of 57.6x and PB of 3.2x for the first time.
Risk warning: Low-altitude policies fall short of expectations, increased competition in the general aviation industry, risk of uneven business structure, risk of sharp cost increases, risk of stock price fluctuations, etc.