The company forecasts net profit for 2023, slightly exceeding market expectations

Baiyun Airport announced 2023 performance forecast: The company expects to achieve net profit of 438 million yuan to 536 million yuan (-1,071 million yuan in 2022) in 2023; expected net profit of 164 million yuan to 261 million yuan for 4Q23 (VS.3q23 is 116 million yuan, 4Q22 is -444 million yuan), 4Q23 performance is slightly better than market expectations. We estimate that it may be due to better cost control than expected, or that the revenue performance of the non-aviation business is better than expected.

Key points of interest

4Q23 The degree of recovery of business data declined slightly, and the degree of restoration of international flights increased. 4Q23's overall, domestic and international passenger throughput was restored to 89%, 99%, and 59% respectively in the same period in 2019. The degree of recovery decreased by 3 ppt compared to 3Q23, down 6 ppt, and increased by 4 ppt, respectively. Domestic demand recovery declined slightly in the off-season, while international flight recovery continued to advance. The number of international passengers in December recovered to 61% of the same period in 2019.

The construction of the third phase of the project continues to advance. On December 31, 2023, the company's East Fourth West Fourth Corridor was put into operation to achieve the completion of the T1 and T2 terminals; at the same time, the main building of the T3 terminal was capped in January 2024. According to the announcement of the company's results briefing for the third quarter of 2023, the legal entity and investor of the Phase III project is a group company. It is recommended to focus on the cost impact of the next three phases of the project on listed companies.

Profit forecasting and valuation

We kept the company's 2023 profit forecast of 453 million yuan unchanged; lowered the company's 2024 profit forecast by 9% to 1.03 billion yuan, mainly lowering the company's passenger throughput growth assumption and the duty-free business customer unit price assumption; and introduced the 2025 profit forecast of 1,244 billion yuan, which mainly assumes that domestic and international passenger throughput in 2025 will increase 19% and 3% compared to 2019. The current stock price corresponds to 2023/24/25 price-earnings ratios of 48.8/18.4/17.8 times, respectively. The target price was lowered by 10% to 12.9 yuan. Based on 25 times the 2024 price-earnings ratio (the company's historical average), there is 38% room to rise compared to the current stock price, maintaining the outperforming industry rating.

risks

Tourist demand fell short of expectations; the development of the duty-free business fell short of expectations; and the cost increase brought about by the Phase III project was higher than expected.