中国东航(600115):2022年亏损374亿 2023年起业绩有望显著回升

China Eastern Airlines (600115): Losses 37.4 billion dollars in 2022, performance is expected to pick up significantly from 2023

國信證券 ·  04/02  · Researches

China Eastern Airlines revealed its 2022 annual report. Revenue for the full year of 2022 was 46.11 billion yuan (-31.3%), net profit of -373.9 billion yuan, of which the fourth quarter's single-quarter revenue was 10.26 billion yuan (-29.8%), and net profit was 9.27 billion yuan.

The pandemic affected the decline in passenger flow, and revenue was impacted. The impact of the 2022 epidemic continued throughout the year. Passenger flow in the civil aviation industry declined sharply. The company's passenger traffic volume fell 42.51 million, down 46.3% year on year, compared to 2019, down 67.4%, RPK613 billion, down 43.7% year on year, compared to 2019, 72.4%, passenger occupancy rate 63.70%, down 4.01 pct from 2019, down 18.36 pct from 2019. Constrained by a sharp drop in passenger traffic, it is inevitable that the company's revenue will drop.

Aviation fuel costs and fixed costs are putting pressure, and losses for the whole year are in line with expectations. In 2022, international oil prices were high overall, and airline fuel costs were high. On the basis of operating investment falling significantly short of the same period in '21, the company's aviation fuel costs still increased 7.9% to 22.23 billion, bringing significant cost pressure. Coupled with the fact that the fixed costs of airlines were relatively high, and the depreciation of the exchange rate caused 2.69 billion exchange losses, and the company's operations were under pressure. Looking at the whole year, as the civil aviation industry as a whole suffered three losses in demand, oil prices, and exchange rates, it was inevitable that the company would lose significantly throughout the year, and the loss range was within expectations.

Continuing to be optimistic about the reversal of supply and demand for civil aviation, the company's performance is expected to pick up rapidly. We continue to be optimistic about the general direction of the reversal of supply and demand in the civil aviation industry. The growth rate of the civil aviation fleet slowed sharply in 2020-2022, creating preconditions for a reversal in supply and demand. The company plans to net introduce 22 aircraft in 2023, which is about 2.8% of the size of the fleet in stock, and the growth rate continues to remain low. After the summer and fall of 2023, the number of domestic passenger flights exceeded the same period in 2019, the number of international and regional flights continued to grow, and passenger flow continued to recover.

As demand continues to recover, civil aviation will eventually gradually transition from oversupply to supply and demand balance or even short supply. The freight rate level is expected to continue to be strong, and the company's performance is expected to pick up rapidly.

Risk warning: Macroeconomic downturn, sharp fluctuations in oil prices and exchange rates, safety incidents.

Investment advice: Raise profit forecasts and maintain the “buy” rating.

Considering that compared to the previous report, the optimization of the epidemic prevention policy was earlier than expected, the pace of recovery in the civil aviation industry was ahead of schedule, and oil prices declined, so the profit forecast for 2023-2024 was raised from -8.61 billion and 7.16 billion, respectively, to 2.33 billion and 13.16 billion yuan respectively. Introducing the 2025 profit forecast, the company is expected to make a profit of 18.61 billion yuan in 2025, maintaining the “buy” rating.

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