\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 029 China Southern Airlines Company Limited(600029) )
China Southern Airlines Company Limited(600029) disclose the 2021 annual report China Southern Airlines Company Limited(600029) disclosed that in the 2021 annual report, the annual operating revenue was 101.64 billion, an increase of 9.8% year-on-year, the net profit attributable to the parent company was -12.1 billion, and the loss increased by 11.6% year-on-year; In the fourth quarter, the operating revenue of the company was 23.15 billion, a year-on-year decrease of 14.9%, and the net profit attributable to the parent company was -5.984 billion.
The epidemic situation was repeated in the fourth quarter, the passenger flow was relatively low, and the income was in line with expectations. The passenger flow of civil aviation in 2021 has experienced twists and turns, and the performance of the whole year is stronger than that in 2020. However, the door of the country is still almost closed, and the digestion pressure of overseas transport capacity remains. In addition, the national epidemic spread in the fourth quarter, and the relative performance of passenger flow is low, which dragged down the performance of the whole year. The company’s overall operation, investment and business volume performance fell year-on-year, the Chinese line increased slightly, and the passenger seat rate decreased slightly. Due to the tightening of industry supply, demand still recovered year-on-year, and the change of industry passenger flow structure, the company’s passenger kilometer revenue increased by 7.6% year-on-year, including a year-on-year increase of 12.3% for China line and 68.4% for international line. In terms of cargo and mail, the company is the only one of the three major airlines to retain the operation of all cargo aircraft. Thanks to the high prosperity of cargo and mail, the company’s cargo and mail revenue increased by 20.6% year-on-year, accounting for 19.6%. Overall, the company’s annual revenue is in line with expectations.
Aviation fuel cost pressure increased, and impairment provision led to higher than expected losses in the fourth quarter. In 2021, the price of aviation fuel increased quarter by quarter. The company’s aviation fuel cost was 25.51 billion yuan, a year-on-year increase of 35.7%, the cost of aviation fuel per ask increased by 36.2% year-on-year, and the other costs were relatively stable. The cost of non oil per ask increased by 3.8% year-on-year. On the expense side, there was little change in the company’s expenses. Thanks to the company’s refinancing to alleviate the capital pressure, the financial expenses of foreign exchange deduction decreased to a certain extent. In 2021, the company made provision for impairment of RMB 2.614 billion, resulting in higher than expected loss in the fourth quarter.
At the beginning of 2022, the pressure continued, and it was optimistic that the performance would reverse after the epidemic subsided. At the beginning of 2022, the epidemic continued everywhere, the state insisted on strictly controlling the spread of the epidemic, and it will take some time for China’s travel to fully return to normal. However, by lengthening the cycle, we believe that the resilience of civil aviation demand remains unchanged and the overall tightening of supply creates preconditions for the reversal of supply and demand. If the strict epidemic prevention policy changes one day, the release of demand is expected to lead to a significant increase in the performance of aviation companies.
Risk tip: the macro-economy has fallen more than expected, the oil price has risen sharply, the exchange rate fluctuates sharply, and safety accidents
Maintain “buy” rating.
Since the beginning of 2021, the epidemic has continued to exceed our expectations, and the node of comprehensive recovery of civil aviation demand is likely to be delayed. Based on the assumption that the control may be gradually opened from 2023, we lowered the profit forecast from 2022 to 2023 to -7.14 billion and 4.47 billion respectively from 2.34 billion and 14.63 billion, and introduced the profit forecast for 2024. It is estimated that the net profit attributable to the parent company in 2024 will be 15.79 billion, maintaining the “buy” rating.
