CSN(600029) 信达证券·2024-09-01 01:30Investment Rating - The report assigns a "Buy" rating to China Southern Airlines (600029) [1] Core Views - China Southern Airlines' operations are improving, with profitability expected to rebound [1] - The company's domestic passenger load factor has exceeded 2019 levels, while international and regional capacity has recovered to 80% of 2019 levels [2] - Despite revenue growth, the company faced increased losses in Q2 2024 due to seasonal factors and adverse weather conditions [2] Financial Performance - In H1 2024, the company achieved revenue of RMB 84.79 billion, up 18.0% YoY and 16.2% compared to 2019 [2] - Net profit attributable to shareholders was RMB 1.228 billion, significantly reducing losses by RMB 1.647 billion YoY [2] - Q2 2024 revenue reached RMB 40.2 billion, up 6.4% YoY and 13.8% compared to 2019, but net loss widened to RMB 1.984 billion [2] Operational Metrics - H1 2024 gross margin was 7.36%, up 0.49 percentage points YoY, but still below 2019 levels [2] - Q2 2024 passenger load factor reached 83.1%, exceeding 2019 levels by 0.72 percentage points [2] - Domestic passenger load factor was 83.6%, while international and regional routes reached 81.7% [2] Cost Structure - Unit RPK revenue declined by 11.6% YoY in Q2 2024 to RMB 0.564 [3] - Unit ASK cost increased by 3.8% YoY in Q2 2024 to RMB 0.453, mainly due to high fuel prices [3] - Financial expenses decreased due to reduced foreign exchange losses of RMB 891 million [2] Fleet and Utilization - The company's fleet size reached 907 aircraft (including 18 freighters) by H1 2024 [3] - Total flight hours in H1 2024 reached 1,536.6 hours, up 15.82% YoY and 4.29% compared to 2019 [3] - The company plans to add 40, 17, and 10 aircraft in 2024-2026 respectively [3] Financial Projections - The report forecasts net profit of RMB 1.28 billion, RMB 4.288 billion, and RMB 5.694 billion for 2024-2026 [4] - EPS is projected to be RMB 0.07, RMB 0.24, and RMB 0.31 for 2024-2026 respectively [4] - Revenue is expected to grow to RMB 203.931 billion by 2026 [4] Valuation - The stock's PE ratio is projected at 80.71x, 24.09x, and 18.14x for 2024-2026 [4] - PB ratio is expected to decline from 2.72x in 2024 to 2.15x in 2026 [4]