Since the outbreak of covid-19 epidemic, epidemic prevention policies, travel restrictions and repeated epidemics have had a serious impact on the consumption scenes of tourism, catering, hotels, food, drinks and other industries. At present, the epidemic situation is expected to continue to improve. The 14th five year development plan of tourism and other industries also looks forward to the liberalization of entry and exit when the epidemic situation allows. We believe that with the support of policy support + better prevention and control situation, the inflection point of consumption recovery is coming and the prosperity is expected to continue to rise. Looking forward to the future, how to layout the investment after the epidemic and how to interpret the recovery market, the large consumption team of East Asia Qianhai Securities Research Institute has launched a series of in-depth reports on "foreseeing the recovery and layout after the epidemic". This is series 8: airport.
Core view
Throughput gradually recovered, and cargo and mail are better than passenger transport. The passenger volume of civil aviation will recover to 60% ~ 70% in 2019 from 2020 to 2021, of which about 70% of Chinese routes will recover, while about 90% of international and regional routes will lose passenger volume. The volume of civil aviation cargo and mail transportation recovered rapidly and exceeded the level of 2019 in 2021, mainly due to the rapid resumption of work and production and the rapid growth of exports. The number of civil aviation aircraft taking off and landing sorties reached 77.6% in 2019 in 2020 and 86.22% in the same period in 2019 from January to October 2021.
The medium and long-term demand for passenger transport and freight transport is improving. With the gradual stabilization of the epidemic situation and precise epidemic prevention measures, the industry is expected to usher in an inflection point. The civil aviation plan of the 14th five year plan defines the period from 2021 to 2022 as the recovery period and savings period, and the period from 2023 to 2025 is the growth period and release period, focusing on expanding the Chinese market and restoring the international market. With the improvement of the epidemic situation outside China and the orderly relaxation of entry-exit policies, the passenger flow at the airport is expected to gradually recover. According to the expectation of the 14th five year plan for civil aviation, the passenger volume will increase from 420 million to 930 million from 2020 to 2025, and the CAGR is 17.2%. It is expected to return to the pre epidemic level in 2023. Cargo and mail transportation has exceeded the pre epidemic level in 2021. According to the expectation of the 14th five year plan for aviation logistics, the air cargo and mail transportation volume will increase from 6.77 million tons to 9.5 million tons from 2020 to 2025, with a CAGR of 7.0%.
Airport tax exemption is temporarily at a low point, and the scale of domestic tax exemption is expected to continue to grow. Airport (about 50%) and outlying Island (about 40%) duty-free shops are important sales channels of luxury goods in the world, accounting for about 90% in total. The tax-free market in China has great potential. According to Bain data, it has exceeded 59 billion euros in 2020 and is expected to exceed 150 billion euros in 2025. Under the influence of the epidemic, the international passenger flow of the airport has plummeted, the entry-exit tax-free sales have been greatly impacted, and the bargaining power of the airport has been affected; In 2021, Shanghai International Airport Co.Ltd(600009) and China Tourism Group Duty Free Corporation Limited(601888) re signed an agreement to limit the upper limit of tax-free royalty income and link it with international passenger flow. However, with the improvement of the epidemic situation and the recovery of international passenger flow, the airport entry-exit tax-free commission income is expected to rebound rapidly. In terms of tax exemption for outlying islands, the overseas epidemic spread and intensified, affecting outbound tourism, while the epidemic in China was quickly controlled. Combined with the relaxation of tax exemption policies by the State Administration of Taxation, the scale of tax exemption market for Hainan outlying islands expanded rapidly, reaching 27.479 billion yuan in 2020, a year-on-year increase of 103.67%, and 49.470 billion yuan in 2021, a year-on-year increase of 80.03%. Airports with tax-free franchise business on outlying islands have ushered in rare opportunities during the epidemic, and are expected to continue to benefit in the future.
Investment advice
With the improvement of the global epidemic and the orderly relaxation of prevention and control policies, the airport throughput is expected to quickly return to the pre epidemic level. Among them, the recovery of international passenger flow will accelerate the recovery of airport performance in terms of aviation revenue and non aviation revenue. Relevant targets include Shanghai International Airport Co.Ltd(600009) , capital airport, Guangzhou Baiyun International Airport Company Limited(600004) and Xiamen International Airport Co.Ltd(600897) , Shenzhen Airport Co.Ltd(000089) , Meilan Airport.
Risk tips
Economic recovery is slower than expected; The recovery of tax-free commission income is less than expected; The disturbance of the epidemic has intensified.
