\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 111 Air China Limited(601111) )
Air China Limited(601111) released the first quarterly report of 2022, and 22q1 company achieved an operating revenue of 12.92 billion yuan, a year-on-year decrease of 11.4%; The net profit attributable to the parent company was -8.9 billion yuan, and the loss increased by 2.69 billion yuan year-on-year; The net profit attributable to the parent company after deduction was -8.96 billion yuan, and the loss increased by 2.66 billion yuan year-on-year.
Key investment points
Operating data: the operating data of the first quarter was at the bottom
22q1rpk and ask were – 27.8% and – 22.2% year-on-year respectively, and the passenger seat rate decreased by 4.8 percentage points year-on-year. In terms of Chinese routes, 22q1rpk and ask were – 28.3% and – 23.3% year-on-year respectively, and the passenger seat rate was – 4.3 percentage points year-on-year. In terms of international and regional routes, 22q1rpk and ask were – 12.7% and + 2.8% year-on-year respectively, and the passenger seat rate was – 6.3 percentage points year-on-year, which was caused by the repeated outbreak in China in the first quarter, and the difference between supply and demand was – 15.5 percentage points year-on-year.
Revenue side: the epidemic exceeded expectations, resulting in the expansion of losses
22q1 achieved an operating revenue of 12.92 billion yuan, down 11.4% year-on-year and 24.3% month on month. The operating revenue of RPK increased by 22.7% year-on-year. 22q1 company realized a net profit attributable to the parent company of -8.9 billion yuan, with a year-on-year increase of 2.69 billion yuan and a month on month increase of 2.58 billion yuan; The net profit attributable to the parent company after deduction was -8.96 billion yuan, and the loss increased by 2.66 billion yuan year-on-year and 2.48 billion yuan month on month.
22q1 company’s other income was 610 million yuan, a year-on-year decrease of 32.9%; 22q1 investment loss was 842 million yuan, with a year-on-year decrease of 210 million yuan and a month on month increase of 1.69 billion yuan, which was caused by the expansion of investment losses of joint ventures and associates in the first quarter. Air China’s joint-stock company Shandong Airlines predicted a net loss of 1.196 billion yuan to 1.462 billion yuan in the first quarter, close to the loss of the whole year of 2021.
During the 22q1 period, the cash outflow from operating activities was 7.66 billion yuan, the book cash at the end of the period decreased to 11.95 billion yuan (- 28.5%), the asset liability ratio increased by 3.0 percentage points to 81.0% month on month, and the current ratio and quick ratio were 0.28 and 0.25 respectively, unchanged year-on-year but decreased month on month. As the company still has an unused credit line of 113.48 billion yuan by the end of 2021, its liquidity is still good.
Cost and expense side: the rise of unit capacity cost caused by the rise of oil price
22q1’s operating cost was 19.69 billion yuan, an increase of 2.3% year-on-year and a decrease of 13.2% month on month, slower than the revenue end; The unit transportation cost increased. The operating cost of 22q1 ask was 0.71 yuan / seat kilometer, up 31.6% year-on-year. Since 2022, the oil price has continued to rise under the catalysis of the conflict between Russia and Ukraine. In March 22, the oil price of aviation kerosene increased by 59.2% year-on-year, reaching the highest point since 2015, which has a great impact on the performance of aviation companies.
The expenses during the period were relatively stable. The expenses during 22q1 totaled 3.4 billion yuan, a year-on-year decrease of 10.4%, and the expense rate in the corresponding period was 26.4%, a year-on-year increase of + 0.3pct. Among them, the sales expenses reached 1.05 billion yuan, a year-on-year increase of – 4.3%; Administrative expenses reached 1.07 billion yuan, a year-on-year increase of + 0.9%; The R & D cost was 40 million yuan, a year-on-year increase of – 27.0%; The financial expenses were 1.25 billion yuan, a year-on-year increase of + 22.6%, of which the interest difference was 1.47 billion yuan (+ 12.8%), and other financial expenses were – 221 million yuan (310 million yuan in the same period last year). We calculated that the exchange income in the first quarter was about 190 million yuan (350 million yuan in the same period last year), mainly because the RMB exchange rate against the US dollar has been in the appreciation channel since last year.
Future outlook
Under the background of repeated outbreaks and rising fuel prices in China, the aviation industry is in a dark moment, and many small and medium-sized airlines are in a liquidity crisis. We judge that a new round of integration opportunities in the industry are pregnant, and the market pattern may improve. We expect that during the 14th Five Year Plan period, the growth rate of the supply side will slow down, and the supply and demand situation will continue to improve after the suppression factors on the demand side are eliminated. Dahang took the lead in benefiting from this process.
Profit forecast and valuation
The company is the market leader of Beijing hub and has a large number of time resources for core international routes. We believe that the performance of Air China will show great flexibility in the recovery process after the demand rebound. It is expected that the net profit of the company from 2022 to 2024 will be – 12.4 billion yuan, 3.8 billion yuan and 14.8 billion yuan, maintaining the “buy” rating.
Risk tips
Oil price, exchange rate fluctuation, geopolitics, epidemic situation, emergency, etc.
