Incident: Shanghai Airport released its 2023 annual report. In 2023, the company achieved revenue of 11.05 billion yuan, +101.6% year-on-year; net profit to mother was 930 million yuan, +131.2% year-on-year. Among them, 23Q4 achieved revenue of 3.13 billion yuan, +131.4% year-on-year; net profit to mother was 440 million yuan, +149.0% year-on-year.
Various business data continued to improve in 23 years, and net revenue and profit increased significantly. In '23, the company achieved revenue of 11.05 billion yuan, or 101.6% year on year, recovering to 100.9%; net profit to mother of 930 million yuan, +131.2% year on year, recovering to 18.6% year on year, net profit margin of 8.5%, +63.1 pp year on year, compared to the same period in '19. Revenue and profit growth was mainly due to recovery in various business volume indicators: 1) Aircraft take-off and landing: 430,000 flights at Pudong Airport, +112% year over year, back to 85% in '19; Hongqiao Airport recovered to +243% year-on-year Until '19 98% .2) Passenger throughput: Pudong Airport had 54.48 million passengers, +284% year over year, recovering to 72% in '19; Hongqiao Airport had 42.49 million passengers, +344% year over year, recovering to 93% in '19. 3) Cargo and mail throughput: 3.43 million tons at Pudong Airport, +10% year-on-year, recovering to 94% in 2019; 360,000 tons at Hongqiao Airport, +89% year-on-year, recovering to 86% in '19.
The restoration of international passenger flow led to the growth of duty-free business. In 23, Pudong Airport's International+ region achieved passenger throughput of 16.4 million passengers, +1120% over the same period, recovering to 43% in '19. The company's tax exempt contract revenue in '23 was 1.79 billion yuan, +392.6% year-on-year, and recovered to 34.3% in '19. In the single quarter, 23Q1/23Q2/23Q3/23Q4 companies' tax-free contract revenue was RMB 3.3/4.5/5.3/480 million, respectively, +182.1%/+1945.5%/+446.4%/+276.4%, respectively, and recovered to 32.7%/49.1%/57.3%/51.1% in the same period in '19, respectively.
The two business volume repairs in 24M1-2 Shanghai continued, and the business situation continued to improve throughout the year 24, and there is strong certainty. 24M1-2 at Pudong Airport achieved 90,000 take-off and landing sorties, +50.4% year over year, recovering to 102% of 19M1-2; passenger throughput of 12.17 million passengers, +97% year over year, recovering to 97.7% of 19M1-2; cargo and mail throughput of 550,000 tons, +17% year over year, returning to 112% of 19M1-2. Hongqiao Airport's 24M1-2 aircraft will soon carry out 50,000 flights, with a passenger throughput of 7.79 million passengers and a cargo and mail throughput of 40,000 tons. Profit forecasts and investment suggestions. We believe demand has grown rapidly in '23. The company has benefited from two mergers and deep ties with China's exemption. Both aviation and non-aviation performance are resilient. The company's net profit from 24-25 was adjusted to 3.41/5.75 billion yuan (previous value was 3.40/5.76 billion yuan), and the 26-year net profit of 7.79 billion yuan was added. Considering the recovery period, the company's short-term performance did not reflect the actual profit situation, so 18 times PE was given based on the 2025 results, and the target price was 41.61 yuan to maintain the “hold” rating.
Risk warning: risk of macroeconomic fluctuations; risk of demand recovery falling short of expectations; risk of changes in tax exemption policies.