分季度看，公司收入恢复程度与全国铁路客流恢复节奏相似。Core view: Net profit for 23 is in line with the forecast; net profit for the Beijing-Shanghai high-speed railway in '24 exceeded expectations of 40.7 billion yuan (yoy +110%) in 23, net profit to mother of 11.5 billion yuan (loss of 580 million yuan in '22), and net profit is in line with the performance forecast (108-12.2 billion yuan). The company achieved revenue of 10.1 billion yuan (yoy +13%) and net profit to mother of 2.96 billion yuan (yoy +33%) in 1Q. Net profit was higher than our expectations (2.67 billion yuan). 1Q Company should have accounted for a loss of 0.3 billion yuan in Jingfu Anhui; the Beijing-Shanghai Line recorded a net profit of 2.99 billion yuan, which recovered to 117% in 2019. The increase in net profit in 1Q was mainly due to high railway passenger flow, low base, operating leverage, and loss reduction in Beijing, Fujian, and Anhui. Considering that Jingfu Anhui lost more than expected, we raised the company's net profit to mother in 2024/25/26 to 132/143/153 billion yuan (previous value: 128/141/100 million yuan). We adjusted the target price to 6.90 yuan (previous value 6.64 yuan) based on WACC = 7.98% and g = 2.5% (previous value WACC = 8.30%, g = 3%). The company plans to pay a dividend of 0.1116 yuan/share for 2023, with a dividend discount rate of 2.2%, and also proposed a share repurchase plan of 1 billion yuan. Maintain “buy-in.”
2023: Concentrated release of travel demand and restoration of profitability
Railway passenger flow recovered relatively well in '23, mainly due to the combination of demand for business, travel, and family visits. The number of passengers carried by the Beijing-Shanghai Main Line increased by 209% year on year in '23, which is basically the same as in '19; the operating mileage of Beijing-Shanghai cross-line trains increased 66% year on year, up 16.5% from '19. The operating mileage of Beijing-Fu-Anhui trains increased 54% year over year. By route, the company should have accounted for a loss of 630 million yuan in Beijing, Fujian and Anhui in '23 (year 22: loss of 1.8 billion yuan); the Beijing-Shanghai line recorded a net profit of 12.2 billion yuan (22:1.2 billion yuan), an increase of 2% over 2019.
On a quarterly basis, the company's revenue recovery is similar to the pace of recovery in railway passenger flow across the country.
1Q '24: Beijing-Shanghai cross-line boom was high. Beijing, Fujian, and Anhui drastically reduced losses and 1Q revenue increased 13% year-on-year, mainly due to increased passenger flow and lower base. The national railway passenger traffic boom continues to rise. The railway passenger traffic volume in Q1/Q2/Q3/Q4 in '23 was 93/107/113/ 108%, and in Q1 '24 it was 119% in '19. 1Q operating costs increased 6% year over year.
According to related transaction announcements, 1Q commissioned transportation management fees (accounting for 27% of costs) increased 7.7% year on year, mainly due to infrastructure unit prices rising about 6.3% as agreed; EMU usage fees (accounting for 19% of costs) increased 2% year on year, indicating lackluster growth of Beijing-Shanghai main line cars; line usage/catchnet usage fee revenue increased 14/ 15% year over year, indicating that revenue from the Beijing-Shanghai Line and Beijing-Fuzhou Anhui 1Q increased rapidly. Benefiting from increased revenue, increased operating leverage, and lower interest rates, resulting in lower financial expenses, Jingfu Anhui 1Q drastically reduced losses.
Looking forward to 24 years: The off-peak travel season is divided, and the travel radius is shortened. Travel demand is better than business travel. We believe that 24 may show the characteristics of a stronger peak season and a weaker off-season. Tourism is strong, and business demand is slightly worse. For example, during the Spring Festival travel season and Qingming holiday this year, Baidu's migration index peaked higher than in '23; however, in March, when business travelers were the majority, the migration index declined year-on-year. Travel is characterized by short distances. The 1Q railway passenger turnover growth rate is about 4 pct lower than the passenger traffic growth rate. In the context of weak public and commercial demand, we believe that aviation promotion policies may generate more direct competition for high-speed rail.
Risk warning: ticket price control, cost increase, road network diversion, reduction of shareholders' holdings.
