\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 111 Air China Limited(601111) )
Business data: the supply and demand of China’s routes have warmed up
In 2021, the group introduced 43 passenger aircraft, with a net increase of 39 aircraft. At the end of the year, the group operated 741 passenger aircraft (excluding business aircraft), with an average age of 8.23 years. The company plans to introduce 46, 15 and 9 aircraft in 22-24 years, with a net increase of 24, 0 and – 2 respectively. In 2021, the company’s comprehensive ask and RPK decreased slightly by 2.3% and 4.7% year-on-year respectively, and the seating rate was 68.6%, a year-on-year decrease of 1.8pct. In Q4, ask and RPK of the company were – 33.4% and – 39.6% respectively year-on-year, and the seating rate was 64.8%, down 6.8% year-on-year. Due to the repeated impact of the epidemic, ask and RPK recovered to 53% and 45% in 2019 in 2021, and the seating rate recovered to 85% in 2019. In terms of Chinese routes, both ask and RPK of the company increased year-on-year, with year-on-year growth rates of 7.7% and 4.5% respectively, 87% and 73% higher than that in 2019; The occupancy rate was 69.6%, a year-on-year decrease of 2.1pct. In terms of international routes, the company’s ask and RPK decreased significantly, with a year-on-year decrease of 77.7% and 84.0% respectively, and the passenger seat rate was 45.3%, a year-on-year decrease of 17.7pct. In terms of regional routes, ask and RPK of the company recovered, with a year-on-year increase of 26% and 30.5% respectively, and the seating rate was 53.2%, with a year-on-year increase of 1.8pct. In terms of quarters, the company’s transportation capacity and passenger turnover were significantly repaired in the second quarter alone. Ask and RPK increased by 88.2% and 108.7% year-on-year respectively. There was a year-on-year decline in other quarters, which was mainly affected by the local new year policy and the repeated epidemic situation outside China.
Revenue side: passenger transport grew steadily, and the benefits of “passenger to cargo” were obvious
In 2021, the company achieved an operating revenue of 74.53 billion yuan, an increase of 7.2% year-on-year. In 2021, the company went all out to tackle tough problems of benefits and increased revenue based on the principle of maximizing revenue and benefits. In 2021, the company’s rasK reached 0.56 yuan / + 9.9%, and the passenger revenue was 58.32 billion yuan / + 4.6%. In addition, the company strengthened the passenger cargo linkage, optimized the investment of passenger aircraft cargo class, and realized the revenue of passenger aircraft cargo class of 8.72 billion yuan. In terms of other income, in 2021, the company obtained 3.8 billion yuan of subsidy income, a year-on-year decrease of 5.8%, including 2.9 billion yuan of Cooperative Route income from local governments, a year-on-year increase of 3%, and 470 million yuan of route subsidy from competent departments, a year-on-year decrease of 43%. In terms of investment income, the company’s share of the net loss of joint ventures in 2021 was 820 million yuan this year, compared with 6 billion yuan in the same period last year. The loss narrowed significantly, which was due to the significant reduction in the losses of its subsidiaries Cathay Pacific Airlines and Shanhang group. In 2021, the company strengthened cash flow control measures. At the end of 2021, the cash balance was 15.94 billion yuan / + 172.9%, with abundant cash on hand.
Upward cost under pressure
In 2021, the company realized an operating cost of 85.84 billion yuan, a year-on-year increase of 13.5%, and the unit ask operating cost was 0.56 yuan, a year-on-year increase of 16.2%. As the oil price remains low in 2020 and continues to rise in 2021, the rise of oil cost is more obvious. In 2021, the company’s oil cost was 20.7 billion yuan, with a year-on-year increase of 39.7%. In the same period, the non oil cost was 65.14 billion yuan, with a year-on-year increase of 7.1%. In 2021, the two accounted for 27.8% / + 6.5pct and 87.4% / – 0.1pct respectively. Among the non oil costs, the take-off, landing and shutdown expenses are 9.67 billion yuan / + 4.6%, the aviation catering expenses are 1.65 billion yuan / + 2.8%, and the depreciation is 19.4 billion yuan / + 4.0%; The cost of the Civil Aviation Development Fund reached 810 million yuan, mainly due to the resumption of the collection of the Civil Aviation Development Fund in 2021; The salary of employees was 18.97 billion yuan, with a year-on-year increase of 11.2%, the highest increase among various non oil costs, which was mainly affected by the increase of production and operation investment in the previous year and the adjustment of social security halving collection policy in the previous year.
In terms of expenses during the period, the sales expenses and management expenses remained relatively stable, and the financial expenses increased significantly. In 2021, the company’s sales expense ratio was 6.0% / – 0.3pct, the management expense ratio was 6.0% / + 0.1pct, and the financial expense ratio increased to 5.5% / + 3.7pct. Due to the continuous appreciation of the RMB, but the appreciation rate of 2.3% in 21 years is lower than 6.9% in 20 years. In 2021, the company’s financial expenses reached 4.13 billion yuan, with a year-on-year increase of 215.3%, of which the interest expense was 5.5 billion yuan / + 7.7%, and the net exchange income was 1.24 billion yuan, with a year-on-year decrease of 65.7%.
Future outlook
According to the judgment of the 14th five year plan of civil aviation, 20212022 is the recovery period and savings period of the industry. We believe that after the recovery period and savings period, the industry will usher in a recovery cycle. With the continuous slowdown of supply growth of the whole industry in 20-22 years, we believe that the future market pattern will continue to recover and continue the trend of the strong being the strong Air China Limited(601111) as the industry leader, it will benefit from the recovery cycle of the industry.
Profit forecast and valuation
We expect the net profit attributable to the parent company from 2022 to 2024 to be – 12.7, 3.1 and 13.8 billion yuan, maintaining the “buy” rating.
Risk tips
Oil price, exchange rate fluctuation, geopolitics, epidemic situation, emergency, etc.
