China Express(002928) 华创证券·2024-07-14 05:31Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 10.3 RMB, indicating a potential upside of 68% from the current price [1][29] Core Views - The company is expected to achieve a turnaround in H1 2024, with projected net profit attributable to the parent company ranging from 0.22 to 0.32 billion RMB, compared to a loss of 7.52 billion RMB in H1 2023 [1][2] - The report highlights a dual logic supporting the company's sustainable operational inflection point: 1) Significant improvement in per-hour subsidy amounts under the new policy, with estimated per-hour subsidies increasing to 0.41-0.6 million RMB, significantly higher than the previous 0.27 million RMB [2] 2) Continued recovery in flight operations, with H1 2024 daily flights reaching 330, a 36% YoY increase and 7.3% higher than 2019 levels [2] Financial Performance - For 2024-2026, the report forecasts net profit attributable to the parent company of 5.1, 8.8, and 12.9 billion RMB respectively, with EPS of 0.4, 0.69, and 1.01 RMB [2] - The company's revenue is expected to grow at 40.4%, 21.2%, and 14.2% YoY in 2024-2026, reaching 7.23, 8.77, and 10.01 billion RMB respectively [25] - Key profitability metrics show significant improvement, with ROE projected to increase from -31.3% in 2023 to 14.2%, 19.6%, and 22.4% in 2024-2026 [25] Industry and Market Position - The report emphasizes the company's leading position in the regional aviation market, covering half of China's regional aviation points and maintaining a high proportion of exclusive routes [2] - The regional aviation market is viewed as a blue ocean with significant potential, and the company's unique business model is expected to benefit from policy adjustments in regional aviation subsidies [2] Valuation - Based on a 15x PE multiple for 2025 earnings, the report sets a target market capitalization of 131 billion RMB [2] - Current valuation metrics show a P/E of 15x, 9x, and 6x for 2024-2026, and a P/B of 2.2x, 1.8x, and 1.4x respectively [25]