\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 111 Air China Limited(601111) )
Event:
Air China Limited(601111) issue annual report of 2021
In terms of business, the company transported 690452 million passengers / yoy + 0.52% in 2021, equivalent to 60.04% of the level in 2019; Ask and RPK decreased by 2.32% and 4.74% respectively year-on-year in 2020, equivalent to 52.97% and 44.87% of the level in 2019; The occupancy rate was 68.63% / yoy-1.75pct, a year-on-year decrease of 12.39pct in 2019.
Among them, 4q2021 company transported 139603 million passengers / yoy-38.79%, reaching 48.80% of the level in the same period in 2019; Ask and RPK decreased by 33.16% and 39.22% respectively year-on-year in 2020, reaching 44.37% and 36.47% in the same period in 2019; The occupancy rate was 65.07% / yoy-6.48 PCT, a year-on-year decrease of 14.12 PCT over the same period in 2019.
In terms of finance, the company achieved an operating revenue of 74.532 billion yuan / yoy + 7.23% in 2021, 54.73% of the same period in 2019; The net profit attributable to the parent company was -16.642 billion yuan / yoy-15.50%, deducting the net profit not attributable to the parent company was -17.056 billion yuan / yoy-15.71%, a year-on-year decrease of 359.69% and 376.27% respectively in 2019.
Among them, 4q2021 achieved an operating revenue of 17.074 billion yuan / yoy-18.89%, up from 51.58% in the same period in 2019; The net profit attributable to the parent company was -6.321 billion yuan / yoy-47.07%, and the net profit not attributable to the parent company was -6.483 billion yuan / yoy-47.46%, a year-on-year decrease of 168795% and 159294% respectively in 2019.
Key investment points:
The rebound of the epidemic interfered with the recovery, and the seat revenue rose. The annual revenue increased by 7.13%
In 2021, the epidemic situation in China rebounded periodically, and the recovery process of the company was disturbed. Ask fell slightly by 2.32% year-on-year. Quarterly, the second quarter benefited from the improvement of the prevention and control situation and the rapid recovery of the company’s demand. In the summer transportation peak season in the third quarter, due to the impact of multiple outbreaks of the epidemic, the recovery process of the industry was greatly disturbed. In the off-season of the industry in the fourth quarter, due to the continuous impact of the epidemic and the strict epidemic prevention measures in Beijing, the ask of the company was less than 50% of the level in the same period in 2019. Driven by the recovery of Chinese business, the annual rasK of Air China was 0.38 yuan / yoy + 7.13%, reaching 88.41% in the same period in 2019. At the same time, benefiting from the strong demand for air cargo and the continuous rise of air freight rates, the company achieved an annual air cargo and mail revenue of 11.113 billion / yoy + 29.93%, an increase of 2.56 billion yuan year-on-year.
Rising oil prices dragged down costs, and the investment loss narrowed sharply to 746 million yuan
In terms of cost, the average oil distribution in 2021 increased by about 64% year-on-year compared with 2020, driving the company’s fuel cost to increase by 5.886 billion yuan year-on-year. Due to the increase of production and operation investment and the resumption of the collection of Civil Aviation Development Fund, the fuel withholding cost of Air China increased by 7.11% year-on-year, and the fuel withholding cask was about 0.43 yuan / yoy + 9.65%.
In terms of expenses, due to the decrease of RMB appreciation in 2021, the company realized a net exchange gain of 1.235 billion yuan this year, a year-on-year decrease of 2.368 billion yuan / yoy-65.72%. After combined with interest income, interest expenditure and interest capitalization deduction, the annual financial expense of Air China was 4.127 billion yuan, an increase of 2.818 billion yuan year-on-year in 2020. In addition, the company’s investment loss in 2021 was 746 million yuan, a significant year-on-year decrease of 87.39%.
The prosperity of the industry is still low, and the medium and long-term starting point may start this year
Since the third quarter of 2021, the market is expected to drive the sector repair first, but under the continuous impact of the epidemic, the fundamentals of the aviation industry are still at the bottom of the large cycle. Due to the strong infectivity of the mutant virus Omicron, the local epidemic situation may be sporadic or normal in the first half of 2022. Considering the reality of China’s per capita medical resources and immune barrier, we expect to wait until the third quarter before we can look forward to matters related to opening up. We are confident that travel will return to normal in the future, but the impact and duration of the epidemic have repeatedly exceeded expectations.
With the official announcement of the New Coronavirus treatment plan (trial version ninth), China’s epidemic has entered the second half, and this year is expected to usher in the long-term starting point of the aviation industry. But the turning point still needs to be patient. In the current cycle caused by covid-19 epidemic, the aviation industry has two logics: Valuation repair and supply-demand elasticity. As the only flag carrier in China, Air China sits at the first National Capital International Airport and has the best time resources and route network. Affected by the recent rebound of local epidemic and industrial safety accidents, the demand for civil aviation has been restrained, and the prosperity of the industry is temporarily low. The company is expected to fully benefit from the upward stage of the cycle.
Profit forecast and investment rating: it is estimated that the company’s revenue from 2022 to 2024 will be 82.45 billion yuan, 121912 billion yuan and 150102 billion yuan respectively, and the net profit attributable to the parent company will be -12.527 billion yuan, 5.299 billion yuan and 11.577 billion yuan respectively, corresponding to PE of -10.99 times, 25.99 times and 11.89 times respectively. Considering that the fundamentals of the aviation industry are at the bottom of the large cycle, the company will fully benefit from the arrival of the upward stage of the future industry cycle and maintain the “overweight” rating.
Risk tips: (1) permanent loss risk: Bankruptcy caused by cash flow fracture and passive substantial dilution of shares caused by huge additional issuance at the bottom; (2) Periodic impact risk: at the macro level, the economy fluctuates greatly, the epidemic breaks out again, and major natural disasters, vaccination and related drug research and development are blocked; In terms of industry, major policy changes, aviation accidents, intensified industry competition, etc.
