Investment Rating - The investment rating for China Southern Airlines is "Accumulate" [2][5]. Core Views - The report indicates that the supply and demand in the industry are expected to continue recovering, with the company poised to reduce losses in its main operations. The construction of the Beijing Daxing hub is anticipated to elevate the profit center [4][5]. - The company has significant profit elasticity and benefits from a potential decline in oil prices, which could enhance profitability during peak seasons [5]. Summary by Sections Financial Performance - The net profit for the first half of 2024 is projected at -1.23 billion RMB, with a significant impact from a nearly 1.4 billion RMB investment loss due to the capital increase in Sichuan Airlines. The main operations are expected to continue reducing losses year-on-year [5]. - The company’s fleet size increased by 6.7% compared to the same period in 2019, with an ASK growth of 6% [5]. - The passenger load factor improved by 6 percentage points year-on-year, surpassing 2019 levels, while seat revenue increased by 4% compared to 2019 [5]. Market Position and Strategy - The company is actively investing in international routes, capitalizing on cross-border e-commerce opportunities, leading to a 4.5 billion RMB increase in logistics profits to 1.7 billion RMB [5]. - The report highlights that if the average fuel procurement price decreases by 10%, the estimated annual net profit increases for China Southern Airlines and other airlines would be 4.2 billion RMB, 4.1 billion RMB, 3.5 billion RMB, 530 million RMB, and 470 million RMB respectively [5]. Long-term Development - The construction of the Beijing Daxing hub is a significant strategic move for China Southern Airlines, as it is the largest base airline at the airport. The company is expected to benefit from new slot allocation policies [5]. - The report anticipates that as supply and demand recover, the profitability of domestic routes will improve, and the long-term profitability of international routes is also expected to enhance [5].
中国南方航空股份：南方航空更新报告：预计供需继续恢复，油价具有下跌期权