\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 029 China Southern Airlines Company Limited(600029) )
Event: the company released the annual report of 2021. In 2021, the company achieved an operating revenue of about 101.6 billion yuan, a year-on-year increase of 9.8%; The net loss attributable to the parent company is about 12.1 billion yuan, an increase of about 1.3 billion yuan over the loss of the previous year (10.8 billion yuan), which is near the median value of the performance pre loss range; The net loss was about RMB 11.6 billion, an increase of nearly RMB 1.6 billion compared with that of the previous year.
China’s aviation demand recovered, and the company’s Chinese route ask rebounded. In 2021, the company’s ask (available seat kilometers) decreased by 0.37% compared with the same period in 2020 and 38.0% compared with the same period in 2019. Among them, China’s passenger transport demand recovered well. In 2021, the ask of Chinese routes increased by 5.9% compared with the same period in 2020 and recovered to 87% in the same period in 2019; The supply and demand of overseas airlines is still low. The ask of international and regional routes in 2021 is only 8% and 11% of that in the same period of 19 years. The company’s comprehensive seating rate in 2021 was 71.3%, a decrease of 0.21 PCT compared with the same period in 2020 and 11.6 PCT compared with the same period in 19 years. In 21 years, the daily utilization rate of the company’s aircraft was 6.96 hours, a year-on-year decrease of 0.06 hours. At the end of 2021, the company operated 862 passenger aircraft (excluding all cargo aircraft), an increase of 1.3% over the end of 2020, higher than the growth rate of the same period last year (0.35%).
Passenger kilometer revenue rebounded, driving the year-on-year recovery of passenger revenue. In 2021, the company’s passenger kilometer revenue was 0.4946 yuan, an increase of 7.60% over the same period in 2020 and 1.7% over the same period in 2019. Among them, the passenger kilometer revenue of China, international and regional increased by 12.2%, 67.7% and 39.1% over 2020. Under the influence of comprehensive volume and price, the passenger revenue of the company in 2021 was 75.4 billion yuan, an increase of 6.89% over 2020 and a decrease of 45.6% over 2019.
Freight business continued to contribute to profitability. Due to the repeated overseas outbreaks, air cargo still maintains a high degree of scenery. In 2021, the company achieved 19.9 billion yuan of freight and mail transportation revenue, a year-on-year increase of 20.6%, a year-on-year increase of 6.3% and a year-on-year increase of 13.4%. Among them, China Southern Airlines logistics, which is controlled by the company, achieved an operating revenue of 19.66 billion yuan, a year-on-year increase of 27.7%, and a net profit of 5.7 billion yuan, a year-on-year increase of 41.7%.
Oil prices rose sharply and the gross profit margin continued to be under pressure. The epidemic had a great negative impact on the company. The company actively reduced costs and increased efficiency. In 2021, the depreciation, amortization and maintenance costs of the company decreased by 1.9% and 13.2% respectively year-on-year, and the cost of meals decreased by 10.7% year-on-year; However, the annual average price of Brent crude oil in 2021 was about US $70.9/barrel, which was significantly higher than that in 2020 (US $43.0 / barrel), putting great pressure on the company’s operating cost. The company’s aviation fuel cost in 2021 increased by 35.7% year-on-year, accounting for about 25.5% of its main operating cost. Based on the above, the company’s main operating cost increased by 9.8% year-on-year in 2021, slightly higher than the revenue growth in the same period. Affected by this, the gross profit margin of the company’s main business in 2021 was – 2.54%, a year-on-year decrease of 0.01pct.
Investment suggestion: the epidemic situation outside China has been repeated, and the recovery of air passenger transport demand has been negatively impacted. We believe that the growth logic and location advantages of head airlines have not changed substantially due to the epidemic situation; With the continuous advancement of covid-19 vaccine / treatment technology, the demand for air passenger transport will gradually recover, and the revaluation of the company’s value is a deterministic event. Based on the longer duration of covid-19 epidemic than expected, we will not consider additional issuance for the time being. We lowered the company’s net profit forecast for 22-23 years to – 5.7 billion yuan and + 1.6 billion yuan respectively (originally – 3.1 billion yuan and + 3.2 billion yuan), and increased the net profit forecast for 2024 by 4.5 billion yuan; Based on the gradual improvement of the company’s fundamentals, maintain the “overweight” rating of the company’s A-Shares and H shares.
Risk warning: the duration of covid-19 epidemic exceeded market expectations; The sharp decline of macro economy leads to the decline of industry demand; Sino US trade frictions continue to ferment, and the RMB exchange rate fluctuates greatly; Crude oil prices rose sharply.
