Spring Airlines discloses its 2023 annual report and 2024 quarterly report. Revenue for the full year of 2023 was 17.94 billion yuan (+114.3%), net profit due to mother of 2.26 billion yuan (+174.4%); single quarter revenue of 3.84 billion yuan (+117.4%), net profit to mother of 420 million yuan (year-on-year loss reduction); single-quarter revenue of 5.17 billion yuan (+33.8%) in the first quarter of 2024, and net profit to mother of 850 million yuan (+127.8%).
Transportation investment increased dramatically, passenger occupancy rates increased markedly, and strong freight rates contributed to a significant year-on-year increase in revenue. Since 2023, civil aviation has continued to recover. The company's capacity investment has increased significantly, and freight rates have also achieved significant year-on-year increases. For the full year of 2023 and the first quarter of 2024, ASK increased 56% and 31% year over year, RPK increased 87% and 38%, respectively, RPK recovered to 107% and 133% in the same period in 2019, respectively, and passenger occupancy rates recovered to 89.4% and 91.18%, respectively. Passenger occupancy rates decreased by 1.42 pct and 1.0 pct, respectively, compared with the same period in 2019. Passenger kilometer revenue in 2023 was 0.41 yuan, up 15.0% year on year, while domestic passenger kilometer revenue increased by 11.2% compared to the same period in 2019, respectively.
The cost savings were remarkable, and the performance was strong. Due to the significant year-on-year increase in the company's operating data, operating costs for the full year of 2023 increased sharply, reaching 15.52 billion yuan, up 34% year on year. Among them, aviation fuel costs were 5.64 billion yuan, up 43.0% year on year, and non-fuel costs were 9.88 billion yuan, up 29.2% year on year. The company's daily aircraft utilization rate in 2023 was 8.50 hours, a significant increase over the previous year, returning to 76% in the same period in 2019. The company's unit ASK's non-fuel cost was 0.208 yuan, a year-on-year decrease of 17%, an increase of 1.6% over the same period in 2019. As the daily utilization rate of the aircraft increases further, the company's unit operating costs are expected to drop further. Thanks to the continuous recovery in business volume, the company's profitability quickly recovered. Net profit due to mother turned loss into profit for the full year of 2023, and net profit to mother doubled year-on-year in the first quarter of 2024.
The company's operations will continue to recover in 2024, and we are optimistic that the performance will continue to rise. The company introduced 6 aircraft in 2023, and plans to introduce 8 aircraft in 2024. The expansion of the fleet, the accelerated introduction of pilots, and the restoration of international routes will continue to support the rapid growth of the company's transportation investment and passenger traffic volume. As business volume grows, the company's passenger occupancy rate and aircraft utilization rate are expected to continue to increase, thus driving performance to continue to rise.
Risk warning: Macroeconomic downturn, sharp fluctuations in oil prices and exchange rates, safety incidents.
Investment advice: Maintain a “buy” rating.
Considering that macroeconomic growth is under pressure and consumption is still weak, the profit forecast is slightly lowered. The company's net profit for 2024-2026 is estimated to be 3.28 billion, 4.03 billion, and 4.72 billion yuan, respectively (24-25 adjustments were -14.7%/-15.0%, respectively). Due to Spring Airlines and its strong business resilience and long-term room for growth, it maintains a “buy” rating.