春秋航空(601021):一季度业绩转盈 旺季弹性可期

Spring Airlines (601021): First-quarter results can be expected to turn profit during peak season

招商證券 ·  04/28  · Researches

Spring Airlines announced results for 2022 and 2023Q1: In 2022, the company's revenue was 8.369 billion yuan, compared to -22.92% year on year, with net loss of 3,036 billion yuan; 2023Q1, the company's operating income was 3.863 billion yuan, +63.65% year on year, and Guimu's net profit was 356 million yuan, and Guimu's net profit turned positive.

The performance bottomed out in 2022, with the mother's net loss of 3 billion yuan. In 2022, due to factors such as the overall downturn in the industry, high oil prices, and the devaluation of the RMB, the company's operating income was 8.369 billion yuan, or -22.92% over the same period last year, with a net loss of 3,036 billion yuan. Judging from operating data: 1) In 2022, the company ASK/RPK fell 26.83%/34.08%, respectively; 2) passenger occupancy rate fell 8.22 percentage points year over year to 74.65%; 3) Passenger kilometer revenue was +16.82% year over year.

2023Q1 achieved net profit of 356 million yuan to the mother, and the performance turned positive, which can be expected during the spring and summer peak season. 2023Q1, the company's operating income was 3.863 billion yuan, +63.65% compared to the previous year, and the net profit of the mother was 356 million yuan, and the performance turned positive.

Judging from operating data: 1) The company ASK/RPK increased 4.60%/25.76% year-on-year in 2023Q1, respectively; 2) The passenger occupancy rate increased 14.62 percentage points year-on-year to 86.88%. The second half of this year's Spring Festival travel season began, and demand from domestic business travelers resumed strong. At the same time, with the further liberalization of the policy side, international flights began to increase markedly. On April 26, China National Airlines carried out 14,147 passenger flights, recovering to 101.8% in 2019. The number of domestic flights within China was 13,199, which recovered to 117.5% in 2019, and international+ regional flights returned to 35% in 2019. As the May Day holiday approaches, the booking data showed impressive results. Tickets for some popular routes were sold out early, and ticket prices for many flights rose to full price. Looking ahead to this spring and summer, we expect that the domestic aviation market will continue to recover with strong support from commercial travelers and stimulated by a series of holidays such as May Day, Dragon Boat Festival, and summer. The flexibility in domestic ticket prices will drive airline profits to recover quickly.

Maintain a “Highly Recommended” investment rating. We expect Spring Airlines' net profit to be 22/43/58 billion yuan in 2023-25, respectively. We believe that Spring Airlines' advantage in the domestic market will allow it to fully benefit from the increase in ticket prices. After the market is fully recovered, the company's stand-alone net profit is expected to reach more than 30 million yuan/year. Compared with the average level before the epidemic, the company's performance flexibility is expected to be fully demonstrated. The company has sufficient catalysts in the short to medium term and long term: 1) the short to medium term has benefited from domestic private travel and the recovery in demand for surrounding international flights; 2) As a low-cost airline leader, the company has shown resilience since the pandemic. Domestic market share bucked the trend and accumulated potential for the post-pandemic era; 3) In the long run, the low-cost aviation model is expected to benefit from increased aviation demand in low-tier cities and broad development space. Maintain the company's “Highly Recommended” rating.

Risk warning: Macroeconomic downturn risks; demand falls short of expectations; oil prices have risen sharply; RMB has depreciated sharply.

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