The company released its 2023 annual report: In 2023, the company's total revenue was 6.984 billion yuan, up 34% year on year, and net profit to mother was 1,399 billion yuan, up 123% year on year.
Among the four major businesses, the aviation information technology service business revenue growth rate is obvious. In 2023, aviation information technology service revenue was 3,851 billion yuan, up 149% year on year, mainly benefiting from a high year-on-year increase in seat volume; settlement and settlement service revenue of 447 million yuan, up 52% year on year, mainly due to the year-on-year increase in seat volume; system integration service revenue of 994 million yuan, down 41% year on year, mainly due to the impact of when airport projects were completed, the number of completed projects was lower than last year; data network service revenue of 390 million yuan fell 5% year on year, mainly due to the use of new models such as interfaces, traditional The number of agent businesses has declined.
In 2023, the total number of domestic and foreign commercial airline flight bookings handled by the company was 620 million, an increase of 149% over the previous year, returning to 90% in 2019. From January to March 2024, the total number of domestic and foreign commercial airline reservations handled by the company was 177 million, up 38% year on year, returning to 106% in 2019. Among them, China commercial airline flight bookings (international segment) were 18 million, an increase of 355% year over year, returning to 74% in 2019. China's commercial airline flight bookings (domestic segment) were 156 million orders, an increase of 28% year over year, returning to 114% in 2019. China's commercial airline flight bookings (international and domestic flights) were 174 million, an increase of 38% year over year, returning to 108% in 2019. Foreign commercial airline flight bookings were 0.3 billion, an increase of 36% year over year, returning to 53% in 2019.
The fundamentals of aviation tourism have been improving for a long time. The revenue drivers of the company's aviation information technology service business, settlement and clearing business, and data network service business are flight reservations processed by the electronic travel distribution (ETD) system. According to data from the Civil Aviation Administration, in 2019, the number of flights per capita in China was 0.47, lower than the world average of 0.87, 2.83 in the US, 2.4 in Canada, and 3.0 in Australia. According to the “2020 China Air Accessibility Report for Cities Below the Sub-Provincial Level”, as of 2019, there are still 1 billion people in China who have not flown. According to the “Notice of the Civil Aviation Administration on Issuing an Action Plan for Building a Strong Civil Aviation Country in the New Era”, the number of flights per capita in China will rise to 1 in 2035. As a result, there is huge room for growth in China's flight bookings.
Investment in airport informatization is accelerating. The revenue driver for the company's system integration business is investment in new and existing airport informatization. The company has a competitive advantage in systems such as reservation, departure, luggage, security, command and dispatch. According to data from the Civil Aviation Administration, in 2022, China had 254 transport airports, and the demand for informatization, digitalization and intelligence at existing airports continues to grow. Furthermore, according to the Civil Aviation Administration's plan, China will build about 450 transport airports by 2035, and the addition of additional airports will also spur an increase in system integration services. In 2023, the Civil Aviation Administration issued the “Guiding Opinions on Accelerating the Construction and Development of Smart Civil Aviation”, and infrastructure investment in the civil aviation industry in the past two years has maintained a scale of more than 100 billion yuan per year, all of which are positive signs of the acceleration of airport informatization transformation.
Upgraded from an “Overweight” rating to a “Buy” rating. The company's net profit forecast for 2024 and 2025 was raised, and the 2026 net profit forecast value was added to 2,071 billion yuan/2,371 billion yuan/2,623 billion yuan, respectively (the original forecast for 2024 and 2025 was 1,881 billion yuan/2,245 billion yuan, respectively). The company's 2024/2025/2026 PE is 14X/12X/11X, respectively. Two comparable companies, Guanglianda and Zhongwang Software, were selected. The average PE value of the comparable companies in 2025 was 42X. Considering that China Aviation Communications is a Hong Kong stock company, the company was given a 51% discount on Hong Kong stocks. The target market value is HK$53.5 billion, or HK$18.60 per share. There is room for 70% increase from the current level, and the rating will be upgraded from an “increase” rating to a “buy” rating.
Risk warning: 1) Infrastructure investment in the civil aviation industry falls short of expectations; 2) The Chinese government liberalizes entry policies for foreign GDS providers.