\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 029 China Southern Airlines Company Limited(600029) )
Event:
China Southern Airlines Company Limited(600029) released the first quarterly report of 2022
In terms of business, in the first quarter of 2022, the company transported 181038 million passengers / yoy-18.93%, equivalent to 49.77% of the level in 2019; Ask and RPK decreased by 9.96% and 15.14% respectively year-on-year in 2021, equivalent to 53.57% and 42.20% of the level in 2019; The occupancy rate was 65.29% / yoy-3.98 PCT, a year-on-year decrease of 17.59 PCT in 2019. In terms of finance, the company realized an operating revenue of 21.471 billion yuan / yoy + 1.03% in the first quarter of 2022, 57.05% of the same period in 2019; The net profit attributable to the parent company was -4.496 billion yuan / yoy-12.23%, and the net profit not attributable to the parent company was -4.575 billion yuan / yoy-18.89%, a year-on-year decrease of 269.72% and 286.05% respectively.
Key investment points:
The rebound of the epidemic was blocked, and ask fell 9.96% year-on-year in the first quarter
Benefiting from the year-on-year recovery of aviation demand during Spring Festival transportation and holidays, the passenger volume of China Southern Airlines in January and February 2022 increased by 9.96% and 45.45% respectively year-on-year; In March, the company's passenger volume decreased by 63.62% year-on-year due to the interference of the epidemic situation in many local places and the superposition of industrial safety accidents. Overall, China Southern Airlines' passenger transport business operated at a low level in the first quarter, and the passenger volume and ask decreased by 18.93% and 9.96% respectively year-on-year. However, the company still achieved a slight year-on-year increase of 1.03% in revenue in this period, which is expected to be caused by the increase of passenger kilometer revenue and freight revenue in the peak season of Spring Festival transportation.
The high oil price dragged down the cost performance, and the operating cost increased by 1.46 billion yuan
In the first quarter, although the company's transportation capacity investment decreased, affected by the year-on-year increase of about 60% of the oil price, the company's operating cost increased by 1.46 billion yuan, a year-on-year increase of 6.22%; Cask rose 17.98% year-on-year to 0.56 yuan.
On the expense side, benefiting from the slight appreciation of RMB by 0.43% in the current period, the company's financial expenses decreased by 364 million, a year-on-year decrease of 23.79%. Under the combined effect of the above factors, the net loss attributable to the parent company of 1q2022 increased slightly by 490 million yuan, and the performance continued to be under pressure.
The fundamentals are still at the bottom of the large cycle, and the inflection point needs to wait patiently
Under the influence of repeated epidemics, high oil prices and other factors, the fundamentals of the aviation industry are at the bottom of the large cycle level. Due to the strong infectivity of the mutant virus Omicron, the epidemic situation in China was 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 looking forward to the issues related to opening up. With the announcement of the "novel coronavirus diagnosis and treatment plan (trial version 9)", China's anti epidemic has entered the second half. This year may usher in the medium and long-term starting point of the aviation industry, but the inflection point still needs to wait patiently. In the current round of large cycle caused by covid-19 epidemic, aviation stocks have two logics: Valuation repair and supply-demand elasticity.
As the largest airline company in Asia, China Southern Airlines continued to strengthen its hub network strategy with Guangzhou and Beijing as the core. When the upward phase of the cycle comes, the company is expected to fully benefit.
Profit forecast and investment rating: Based on prudence, the impact on the company's performance and share capital will not be considered until the final completion of the additional issuance. It is estimated that the company's revenue from 2022 to 2024 will be 107899 billion yuan, 147057 billion yuan and 176103 billion yuan respectively, and the net profit attributable to the parent company will be -10.479 billion yuan, 4.510 billion yuan and 10.086 billion yuan respectively. The corresponding PE from 2023 to 2024 will be 23.71 times and 10.60 times respectively, maintaining 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 and intensified industry competition.
