China Express(002928) 华创证券·2024-09-01 06:10Investment Rating - The report maintains a "Strong Buy" rating for the company, indicating an expectation to outperform the benchmark index by over 20% in the next six months [1][19]. Core Views - The company is expected to benefit from dual factors: adjustments in subsidy policies and improvements in operational performance, leading to a sustainable turning point in profitability [1]. - The financial performance for the first half of 2024 shows a significant recovery, with revenue reaching 3.21 billion RMB, a year-on-year increase of 45.0%, and a net profit of 0.26 billion RMB, compared to a loss of 0.75 billion RMB in the same period last year [1][2]. Financial Summary - Revenue and Profitability: - 2024H1 revenue was 3.21 billion RMB, up 45.0% year-on-year, with a net profit of 0.26 billion RMB, a significant recovery from a loss of 0.75 billion RMB in 2023H1 [1][2]. - The company forecasts net profits of 0.33 billion RMB, 0.75 billion RMB, and 1.26 billion RMB for 2024, 2025, and 2026 respectively, with corresponding EPS of 0.26, 0.58, and 0.98 RMB [2][10]. - Operational Metrics: - The ASK (Available Seat Kilometers) increased by 42.2% year-on-year in 2024H1, while RPK (Revenue Passenger Kilometers) rose by 51.9% [1]. - The passenger load factor improved to 77.9%, up 5.0 percentage points year-on-year [1]. - Cost and Expenses: - Operating costs for 2024H1 were 3.12 billion RMB, a year-on-year increase of 23.6%, while the seat kilometer cost decreased by 13.0% [1][2]. - The total expenses for 2024H1, excluding foreign exchange impacts, were 541 million RMB, with a total expense ratio of 16.8% [1]. - Other Income: - Other income for 2024H1 reached 510 million RMB, a significant increase of 261% year-on-year, primarily due to increased government subsidies [1][2]. Investment Recommendations - The report suggests that the company is at a valuation bottom and is expected to return to a growth trajectory, with a target market value of 11.2 billion RMB and a target price of 8.8 RMB, representing a potential upside of 52% from the current price of 5.76 RMB [1][10].