中国东航(600115):全年亏损374亿 行业供给收紧拉长 需求端潜力十足 看好复苏周期下公司弹性释放

China Eastern Airlines (600115): Losing 37.4 billion dollars throughout the year, the tightening of industry supply and the potential to lengthen the demand side is full of optimism about the company's flexibility to be released during the recovery cycle

華創證券 ·  04/02  · Researches

The company announced its 2022 annual report: The loss for the whole year was 37.4 billion dollars, up from '21. 1) 2022: Revenue was 46.11 billion, down 31.3% year on year, down 61.8% from 2019, of which passenger revenue was 35.03 billion, down 35.3% year on year, and freight revenue was 7.77 billion, down 6.5% year on year. There was a loss of 37.39 billion dollars for the whole year (loss of 12.21 billion for the same period in '21), and a loss of 37.95 billion dollars after deduction. 2) Quarterly: Q4 revenue was $10.26 billion, down 29.8% from the previous year and down 62.6% from 2019; losses of $9.27 billion (loss of $4.05 billion in Q4 of '21), and Q1-Q4 net profit after deducting non-net profit of -78.2, -110.3, -95.0 million, and -9.60 billion, respectively. 3) Exchange gains and losses: RMB depreciated 9.2% for the full year of '22, achieving exchange losses of 2.69 billion yuan, and achieving exchange earnings of 1.62 billion in '21; of these, RMB appreciated 1.9% in Q4, achieving exchange earnings of 3.7 billion yuan, and 21Q4 was 740 million.

4) Other revenue: 3.25 billion yuan, a year-on-year decrease of 33.4%, of which Q4 achieved 920 million, a year-on-year decrease of 26.5%.

Revenue level: a) Passenger kilometer revenue in '22 (including fuel surcharges, including revenue from partner routes) was 0.60 yuan, an increase of 13.4% over the same period in '19, an increase of 15.3% over the same period in '19. The revenue per kilometer was 0.38 yuan, an increase of 6.7% over the previous year, and a decrease of 10.5% from '19. b) It is estimated that Q4 passenger kilometer revenue was 0.60 yuan, an increase of 25.9% over the previous year, an increase of 35.1% over 19Q4, and a profit of 0.39 yuan per kilometer, an increase of 32.9% over the previous year, and an increase of 8.4% over Q4 in '19.

Costs and expenses: 1) The annual operating cost was 74.6 billion dollars, -6.8% year on year. Among them, aviation fuel costs were 22.2 billion, an increase of 8.0% over the previous year, and domestic oil prices and comprehensive procurement costs increased 74.6% year-on-year during the period. The oil deprivation cost was 52.4 billion, -11.9% year on year. The cost of a square kilometer was 0.776 yuan, an increase of 55.7% over the previous year; the fuel cost for a square kilometer was 0.544 yuan, an increase of 47.2% over the previous year. 2) Q4 operating costs were 183 million yuan, -11.3% year on year. The estimated fuel cost was 5.1 billion yuan, compared to -10.7% year on year, the cost per kilometer was 0.920 yuan, an increase of 62.8% over the previous year, and the fuel cost per kilometer was 0.662 yuan, an increase of 62.4% over the previous year. 3) Expenses: 22 The total of the three fees (deduction) for the full year was $11.56 billion, +1.0% year on year. The deduction rate was 25.1%, an increase of 8.0 pts over the previous year. The total of the three withholding fees in Q4 was 2,070 million, -17.0% year on year, and the deduction rate was 20.2%, an increase of 3.1 pts over the previous year.

Fleet introduction: A net increase of 22, 27, and -2 aircraft is expected in 23-25, and a net exit in 25 (737 introduces 2, 6 and 0 aircraft). The growth rate is 2.8%, 3.4%, and -0.2%, corresponding to the average annual fleet growth rate of 2.2% in 19-25. At the same time, it is disclosed that the net increase in 26 was 22 aircraft, a growth rate of 2.7%. There has been a slight increase in the proportion of widebody machines, which is expected to increase from 13.0% in '22 to 14.2%.

Investment suggestions: 1) Profit forecast: Based on the previous report, industry demand has continued to recover since the implementation of the Class B management policy, while oil prices and exchange rates fluctuated greatly. We adjusted the estimated net profit attributable to the mother in 23-24 to 3.7 billion and 163 billion dollars respectively (the original forecast profit was 3.7 billion yuan and 15 billion yuan). At the same time, we introduced the 2025 profit forecast as the estimated profit of 18.1 billion yuan. The corresponding EPS for 23-25 was 0.17, 0.73, and 0.81 yuan respectively, and PE was 31, 7, 6 times, respectively. 2) Investment advice: Emphasize opinions, important investment opportunities within the framework of the reversal of the classic dilemma of the travel chain. According to Flight AI statistics, the average bare ticket price in the market in the past 7 days was +2% compared to 19 years, and the passenger occupancy rate has not yet reached the level of 19, which means that the interpretation path of the industry's inertial passenger occupancy rate rise -> price increase has changed. The factors behind it are: a) since price marketization, the overall ticket price increase has opened up space; b) the optimization of the airline's revenue management system and the strategy of prioritizing prices. This means that after the season changes, in the context of increased international shifts, wide-body aircraft will fly overseas and excess capacity will return to the international market. The price side will be more supported, and flexibility is expected to be significantly higher than before. In the latest introduction plans of the three major airlines, the low supply growth rate has been determined, and sustainability has been further extended; the demand side is full of potential. According to Flight AI data, the May Day ticket search index and ticket price levels have all increased significantly compared to 19, and the volume and price of private travel is expected to rise sharply during the May Day holiday and the peak summer season. It was emphasized that under the main line of recovery in the aviation industry in '23, the market will be higher and continue for a longer period of time. We estimated in our previous report that once the discount rate for the company's top 20 routes increases, it is expected that revenue will increase by more than 10 billion dollars. At the end of '22, the company's books still did not confirm deferred income tax assets of 39.2 billion dollars, which can later be used for deductions. The estimated increase in revenue corresponds to the increase in profit. Furthermore, the company's net profit deducted on a stand-alone basis in 2011-19 was 8.88 million yuan, an average of about 10.5 million before tax. Based on the size of the existing fleet, the total peak profit is expected to exceed 18 billion dollars. Based on the company's historical average PE and the traditional pricing method for cyclical stocks, we gave peak profit 10 times PE, corresponding to a market capitalization of 180 billion dollars and a target price of 807 yuan. Our forecast is 57% more room than the current forecast. Emphasize the “recommended” rating.

Risk warning: The economy has declined sharply, oil prices have risen sharply, and the exchange rate has depreciated sharply.

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