春秋航空(601021)2022年年报及2023年一季报点评:一季度盈利超预期 低成本龙头弹性初现

Spring Airlines (601021) 2022 Annual Report and 2023 Quarterly Report Reviews: First-quarter Earnings Exceed Expectations, Low-Cost Leaders Elasticity Began

國海證券 ·  04/28  · Researches


Spring Airlines Releases 2022 Annual Report and 2023 Quarterly Report

In terms of business: The company carried a total of 13.655 million passengers/yoy -36.1% in 2022, equivalent to 60.8% in 2019; ASK and RPK fell 26.8% and 34.1% respectively from 2021, equivalent to 69.4% and 57.1% in 2019, respectively; the passenger occupancy rate was 74.7% /yoy-8.2 pcts, down 16.2 pcts from 2019.

The 1Q2023 company transported 5.04 million passengers/yoy +16.3%, equivalent to 95.7% in the same period in 2019; ASK and RPK rose 4.6% and 25.8%, respectively, equivalent to 102.0% and 96.1% in the same period in 2019; the passenger occupancy rate was 86.9% /yoy+14.6 pcts, down 5.3 pcts from the same period in 2019.

Financial aspects: The company achieved operating income of 8.37 billion yuan/yoy -22.92% in 2022, reaching 56.5% of the same period in 2019; net profit of the mother was 3.04 billion yuan, after deducting net profit of the non-return mother - 320 billion yuan, an increase of 3.07 billion yuan and 3.09 billion yuan respectively from 2021, and a decrease of 4.88 billion yuan and 4.78 billion yuan respectively from 2019.

1Q2023 achieved operating income of 3.86 billion yuan/yoy +63.6%, or 106.1% of the same period in 2019; Guimu's net profit was 360 million yuan, an increase of 790 million yuan over 2022, a decrease of 120 million yuan over the same period in 2019.

Key points of investment:

The pandemic has repeatedly damaged operations, and losses have widened throughout 2022

Affected by the local epidemic, the company's passenger traffic volume in 2022 was only equivalent to about 60% of 2019. Passenger revenue decreased by 2.42 billion yuan to 8.10 billion yuan/yoy -23.0% year on year, and RRPK was 0.358 yuan/yoy +16.8%. In addition, other revenue fell by 400 million yuan to 920 million yuan/yoy -30.5% year on year due to the decline in business volume and route subsidies.

On the cost side, the rise in international oil prices in 2022 led the company's fuel costs to increase by 580 million yuan to 3.95 billion yuan/yoy +17.3%, and the annual operating cost was 11.59 billion yuan/yoy +2.3%. CASK and oil deflated CASK were 0.38 yuan/+39.8% and 0.25 yuan/ +31.1% respectively. Under the low-cost operating model, the company's cost performance remains at the leading level in the industry.

On the cost side, affected by the devaluation of the RMB, the company's net exchange loss increased by 200 million yuan to 130 million yuan year-on-year in 2022, and financial expenses reached 620 million yuan/yoy +116.9%.

Earnings in the first quarter exceeded expectations, leading the industry to recovery

Since the implementation of the “Class B B tube” of COVID-19 infection at the end of 2022, air travel demand has recovered rapidly. The company's 1Q2023 business volume recovery pace is leading the industry. ASK has already surpassed the same period in 2019, and RPK and passenger traffic have also basically reached the same period in 2019.

Under the combined influence of volume and price recovery guidelines at the regulatory level, rapid recovery in domestic demand, and fuel surcharges in the first quarter, the company's domestic passenger kilometer revenue increased by double digits compared to 2019, laying a solid foundation for reversing the loss in performance. In terms of international business, thanks to the rapid recovery in the Southeast Asian market, the company's regional and international passenger traffic in the first quarter recovered to 21.62% in the same period in 2019, while ticket prices maintained a high increase. Driven by both domestic and international partners, 1Q2023's revenue increased sharply by 1,502 million yuan to 3.883 billion yuan/yoy +63.65%, while operating costs increased 396 million yuan year-on-year to 3.606 billion yuan/yoy +13.30%, CASK was 0.33 yuan, an increase of only 8.3% over the previous year. Benefiting from strong growth on the revenue side, the company successfully reversed losses in the first quarter, achieving net profit of 356 million yuan, reaching 74.93% for the same period in 2019. The profit level exceeded expectations, leading the industry to recovery.

Low-cost leaders are beginning to show flexibility, and I'm optimistic about volume and price performance during the peak season

After the summer and autumn season began on March 26, 2023, domestic flight volume increased steadily, and the work to increase international routes accelerated. The May Day holiday is approaching. According to FlightTai's latest forecast data, the average daily passenger traffic volume of civil aviation during the May 1st period increased by nearly 20% compared to 2019, and ticket prices increased by more than 30% compared to 2019. Looking ahead to the second and third quarters, along with the marginal improvement in the gap between supply and demand and the emergence of ticket price flexibility, the aviation industry's large-scale market cycle is expected to be interpreted ahead of time. As a leading low-cost airline in China, Spring Airlines enjoyed demand dividends and a clear competitive pattern. The company bucked the trend and expanded during the pandemic, and its base and network layout continued to improve. Furthermore, in 2023-2025, the company expects a net increase of 7, 14, and 10 aircraft each year, respectively, and the rate of capacity introduction is clearly ahead of the industry level. As international and domestic flight volumes continue to recover, the company is expected to continue to benefit during the upward phase of the cycle, and stand-alone profits can be expected to rise.

Profit forecasts and investment ratings: Considering that industry fundamentals have reached an inflection point since the epidemic prevention policy was adjusted at the end of 2022, we are optimistic about the price elasticity of the aviation industry in the upward phase of this cycle and adjust our performance expectations for the company. The company's revenue for 2023-2025 is estimated to be 19.212 billion yuan, 25.711 billion yuan, and 26.621 billion yuan respectively, while the net profit of the mother is 1,740 million yuan, 3.862 billion yuan, and 3.357 billion yuan respectively. The corresponding PE is 35.08 times, 15.81 times, and 18.19 times respectively, maintaining the “increase in holdings” rating.

Risk warning: (1) Risk of permanent loss: bankruptcy due to broken cash flow and large-scale issuance leading to large passive dilution of shares; (2) risk of phased shocks: at the macro level, large economic fluctuations, another outbreak of the epidemic, major natural disasters, vaccination and related drug research and development; on the industry side, major policy changes, aviation accidents, increased industry competition, etc.

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