Core Viewpoint - The Shanghai Public Utility Index has shown a slight decline of 0.25% recently, reflecting the overall performance of the public utility sector in the Shanghai Stock Exchange [1] Group 1: Index Performance - The Shanghai Public Utility Index closed at 4604.42 points with a trading volume of 31.554 billion yuan [1] - Over the past month, the index has increased by 0.35%, while it has risen by 0.89% over the last three months, but has decreased by 3.08% year-to-date [1] Group 2: Index Composition - The index is composed of stocks and depositary receipts from five major industry categories: industrial, commercial, real estate, public utilities, and comprehensive [1] - The top ten weighted stocks in the index include: - Beijing-Shanghai High-Speed Railway (7.69%) - China Nuclear Power (5.42%) - China Unicom (4.79%) - Huaneng Water Power (4.79%) - Shanghai Port Group (3.78%) - Daqin Railway (3.66%) - Three Gorges Energy (3.48%) - China Communications Construction (2.99%) - China Railway Construction (2.68%) - Air China (2.64%) [1] Group 3: Industry Breakdown - The industry composition of the index shows that industrials account for 51.38%, public utilities for 33.99%, communication services for 8.94%, consumer discretionary for 1.76%, energy for 1.69%, materials for 1.00%, financials for 0.84%, and real estate for 0.39% [2] Group 4: Index Sample Management - Stocks are included in the index based on their market capitalization ranking in the Shanghai market, with specific rules for inclusion and exclusion based on risk warnings and corporate actions [2]

Investment Rating - The investment rating for the airline transportation industry is "Positive" [2]. Core Viewpoints - The industry has maintained a high passenger load factor since the beginning of 2025, with domestic flight capacity growth being low while international routes are seeing increased capacity. The supply remains tight with a net fleet growth rate of less than 3% [14]. - The passenger load factor has improved compared to both the previous year and the same period in 2019, particularly in domestic routes. Domestic flight turnover has shown steady growth, while international turnover has significantly recovered to levels close to those of 2019 [14]. - Although ticket prices have shown a weak performance due to increased capacity in the second quarter, there is an expectation for price recovery during the summer travel peak season as demand gradually increases [3][14]. Summary by Sections Investment Recommendations - The report suggests focusing on airlines such as Air China, China Eastern Airlines, China Southern Airlines, Spring Airlines, and Juneyao Airlines due to the anticipated recovery in ticket prices driven by improved supply-demand dynamics during the summer peak season [3][14]. Industry Capacity and Ticket Prices - The industry has seen a continuous high passenger load factor, with the flight cancellation rate decreasing as the travel peak season approaches. In May 2025, the industry’s Available Seat Kilometers (ASK) and Revenue Passenger Kilometers (RPK) increased by 8.0% and 11.5% year-on-year, respectively, with a passenger load factor of 84.6%, up 2.7 percentage points year-on-year [4][16]. - Ticket prices in the second quarter have shown a narrowing decline compared to the previous quarter, with an average ticket price of 848 RMB, down 9.2% year-on-year. The average ticket price in early July was down 7.9% year-on-year [5][27]. Fuel Prices and Exchange Rates - The average price of aviation fuel has decreased significantly, with a year-on-year decline of 12.8% in July. The average aviation kerosene price in the first and second quarters was down 10.0% and 17.0% year-on-year, respectively [6][39]. - The exchange rate has remained stable, with the USD to RMB exchange rate at 7.1526 as of July 16, 2025, a decrease of 0.50% from the end of 2024 [6][39]. Operational Performance of Airlines - In the first half of 2025, domestic airlines have shown low growth in capacity, with the exception of a few airlines. The passenger load factor for major airlines has increased year-on-year, with significant improvements noted in domestic routes [8][46]. - In June 2025, the overall ASK growth for major airlines was led by Spring Airlines at 12.4%, while the international routes have shown recovery rates close to 2019 levels for some airlines [46][49].

Investment Rating - The industry investment rating is "Positive" [5] Core Viewpoints - The report highlights that the domestic airline industry is currently in a low season, with a modest increase in capacity deployment of 1.1% year-on-year in June, but a decrease of approximately 2.9% compared to May. Demand remains weak, leading airlines to adopt a more restrained approach to capacity deployment [2][10][14] - Eastern Airlines has shown a notable increase in passenger load factor, rising against the trend of other major airlines, indicating a strategic focus on improving load factors [2][30] - The report anticipates that as the peak summer travel season approaches, operational pressures on the industry are expected to improve, with potential for higher ticket prices due to increased load factors [3][11][38] Summary by Sections 1. Domestic Route Capacity Deployment - In June, listed companies increased domestic route capacity by 1.1% year-on-year, but saw a decrease of about 2.9% month-on-month. Major airlines like Eastern Airlines and Air China reduced capacity by 5.1% and 4.3% respectively compared to May [2][14][16] - The overall passenger load factor for listed companies decreased by 0.4 percentage points month-on-month but increased by approximately 1.7 percentage points year-on-year. Eastern Airlines' load factor continued to rise, reflecting its prioritization of this metric in sales strategies [30][38] 2. International Route Capacity Deployment - International route capacity for listed airlines increased by about 17.4% year-on-year in June, but decreased by 1.5% compared to May. The demand growth for international routes appears to be slowing [3][55] - The passenger load factor for international routes improved by 0.9 percentage points month-on-month and by 1.0 percentage point year-on-year, indicating a slight recovery despite ongoing demand pressures [3][55] 3. Airport Throughput - Major airports such as Shanghai and Shenzhen reported year-on-year growth in international passenger throughput of 17% and 19% respectively. However, there has been a recent slowdown in growth, with some airports experiencing a decline in international passenger numbers over the past two months [68][70]

Investment Rating - The investment rating for the aviation industry is "Overweight" indicating a positive outlook for the sector [7]. Core Insights - The civil aviation passenger transport volume continued to grow steadily in June, with a year-on-year increase of 3.8%, reaching approximately 60.9 million passengers. Capacity saw a slight increase of 0.3% year-on-year [4]. - The average aircraft utilization rate in June was 7.8 hours per day, showing a month-on-month decrease of 1% but remained stable year-on-year [4]. - Major airlines reported growth in capacity and passenger turnover, with notable increases from Spring Airlines (+12%) and China Eastern Airlines (+10%) in passenger turnover compared to the previous year [4]. - The international market is recovering, with June international flight numbers reaching 55,000, recovering to 87.1% of the same period in 2019 [4]. - The report highlights a structural differentiation in recovery across regions, with demand expected to accelerate as the summer travel season begins [4]. Summary by Sections Passenger Transport Data - In June, the total passenger transport volume was approximately 60.9 million, a 3.8% increase year-on-year. Domestic market capacity increased by 0.3%, while international flights reached 55,000, recovering to 87.1% of 2019 levels [4][5]. - Airlines' passenger turnover (RPK) showed growth, with China Eastern Airlines at +10% and Spring Airlines at +12% year-on-year [4]. Airline Performance - The report provides a summary of key airline metrics for June, including ASK (Available Seat Kilometers) and RPK, with China Eastern Airlines and Spring Airlines showing significant growth [5]. - The passenger load factor for June was highest for Spring Airlines at 92.1%, while China Southern Airlines and China Eastern Airlines also reported strong load factors [4][5]. Investment Recommendations - The report recommends continued investment in the aviation sector, highlighting the strong supply logic and demand elasticity, with specific recommendations for China National Aviation, China Eastern Airlines, Spring Airlines, and others [4][7].

国航预计，2025年半年度，实现归属于上市公司股东的净亏损约为17亿元~22亿元，同比上年（净亏 27.82亿）减亏20.9%~39%。扣除非经常性损益事项后，实现归属于上市公司股东扣除非经常性损益后 的净亏损约为18亿元~24亿元。减亏主要得益于提升飞机利用率、推动"保价争量"稳定收益品质、严格 成本管控等举措。 东航预计，2025年半年度，实现归属于上市公司股东的净亏损约为12亿元~16亿元，同比上年（净亏 27.68亿）减亏42%~55%。归属于上市公司股东的扣除非经常性损益的净亏损约为16亿元至21亿元。减 亏主要得益于"持续做强上海枢纽，坚持往远处飞、往国际飞、往新兴市场飞"，新开加密多条国际航 线，大力优化航网结构，积极开展"航空+文旅商展"等立体营销、推进数字化转型、强化成本管控等 等。 对于持续亏损的原因，上述公司均解释称，主要是来自国内市场竞争及国际环境影响。南航具体提到， 受旅客结构变化、高铁冲击、国际环境不稳定不确定因素增多、全球供应链不畅以及汇率波动等多重因 素影响，公司经营压力依然巨大。国航亦提到，受市场供给不均衡、客源结构下沉、高铁网络冲击，以 及国际环境不确定性加深、全球产业链供 ...

Investment Rating - The report maintains a "Recommendation" rating for the aviation industry, indicating an expected increase in the industry index exceeding the benchmark index by more than 5% in the next 3-6 months [7]. Core Insights - The report highlights a significant improvement in the performance of major airlines in Q2, driven by resilient domestic demand and ongoing recovery in international routes [7]. - The report emphasizes the constraints on supply and the reduction in oil prices, which are expected to alleviate cost pressures for airlines [7]. - The report suggests a positive outlook for specific airlines, particularly Huaxia Airlines and Spring Airlines, due to their competitive advantages in the domestic market [7]. Summary by Sections Airline Data Analysis - In June, the overall ASK (Available Seat Kilometers) growth rates were led by Spring Airlines (12.4%), followed by Eastern Airlines (6.5%) and Southern Airlines (4.6%) [1]. - For the first half of the year, cumulative ASK growth was highest for Spring Airlines (9.5%) and Eastern Airlines (7.5%) [1]. - In June, the RPK (Revenue Passenger Kilometers) growth rates were also led by Spring Airlines (11.6%) and Eastern Airlines (10.0%) [1]. - Cumulatively, Eastern Airlines had the highest RPK growth in the first half of the year at 12.2% [1]. Domestic and International Routes - Domestic route performance in June showed Spring Airlines leading with an ASK growth of 10.5%, while international routes saw significant growth from 吉祥航空 (46.9%) [2][3]. - Cumulatively, for the first half of the year, 吉祥航空 had the highest ASK growth in international routes at 65.6% [2]. Passenger Load Factor - In June, the passenger load factor was highest for Spring Airlines at 92.1%, with a year-on-year decrease of 0.6 percentage points [3]. - For the first half of the year, Spring Airlines maintained the highest load factor at 90.5%, despite a year-on-year decrease of 0.8 percentage points [3]. Fleet Growth - As of June 2025, the total fleet of the five listed airlines increased by 5 aircraft, with a year-on-year growth of 3.3% [3][19]. Financial Performance Forecast - The report forecasts significant improvements in the financial performance of major airlines for the first half of 2025, with Huaxia Airlines expected to achieve a net profit of approximately 2.55 billion yuan, a year-on-year increase of 875% [7][9]. - In contrast, the three major airlines (Air China, Eastern Airlines, and Southern Airlines) are expected to report losses, but with reduced loss margins compared to the previous year [7][10].

Investment Rating - The aviation industry is rated as "Overweight" [5] Core Views - The industry is expected to maintain a low supply growth rate, which could improve the supply-demand relationship and enhance airline profitability if demand recovers [1][4] - Despite weak ticket prices recently, the high passenger load factor indicates potential for revenue management improvements [1][4] - The report recommends continuous monitoring of peak season ticket prices and passenger load factors, with a positive outlook for major airlines [1][4] Summary by Sections Passenger Load Factor Performance - In June, the three major airlines maintained a high passenger load factor of 84.1%, up 1.8 percentage points year-on-year [2] - Spring Airlines experienced a slight decline in load factor to 92.1%, while Juneyao Airlines showed improvement with a load factor of 86.7% [3] Revenue and Profitability Outlook - The three major airlines forecasted a narrowing of net losses for Q2 2025, with Air China, China Eastern, and China Southern expected to report net losses of 0.94 billion, 4.05 billion, and 8.00 billion respectively, reflecting a year-on-year reduction of 78.0% [4] - The improvement in profitability is attributed to better revenue levels, with domestic ticket prices showing a smaller decline compared to previous quarters [4] Stock Recommendations - The report highlights several stocks with a "Buy" rating, including Air China (753 HK), China Eastern Airlines (670 HK), China Southern Airlines (1055 HK), and Spring Airlines (601021 CH) [8][21] - Target prices for these stocks are set at 6.90 HKD for Air China, 3.20 HKD for China Eastern, and 5.00 HKD for China Southern, among others [8][21]

Core Viewpoint - The three major Chinese airlines (Air China, China Eastern Airlines, and China Southern Airlines) are expected to report significant reductions in net losses for the first half of 2025, but the overall performance remains uneven compared to international counterparts like Delta Airlines, highlighting a complex recovery landscape in the domestic aviation market [1][2]. Group 1: Financial Performance - Air China anticipates a net loss of between 17 billion to 22 billion yuan, with a non-recurring net loss of 18 billion to 24 billion yuan, showing improvement from a net loss of 27.82 billion yuan in the same period of 2024 [2]. - China Eastern Airlines expects a net loss of 12 billion to 16 billion yuan, with a non-recurring net loss of 16 billion to 21 billion yuan, down from a net loss of 27.68 billion yuan year-on-year [2]. - China Southern Airlines projects a net loss of 13.38 billion to 17.56 billion yuan, with a non-recurring net loss of 17.54 billion to 23.80 billion yuan, although its net loss is slightly higher than the previous year's 12.28 billion yuan [2]. Group 2: Factors Influencing Performance - The reduction in losses for the three major airlines is attributed to various strategies, including improved aircraft utilization, marketing strategies, and cost control measures [2]. - The airlines face challenges from high-speed rail competition on short-haul routes and insufficient ticket revenue, despite passenger volumes recovering to or exceeding 2019 levels [3][6]. - Hainan Airlines is expected to achieve a net profit of 45 million to 65 million yuan, indicating successful capacity adjustments and refined management compared to the larger airlines [3]. Group 3: Market Trends and Expectations - The civil aviation industry in China has shown significant recovery momentum, with passenger transport volume reaching 370 million in the first half of 2025, a 5.9% increase year-on-year [4]. - During the summer travel season, passenger transport volume is expected to reach 150 million, reflecting a 5.4% year-on-year growth [4]. - Despite the recovery, the average ticket price for domestic routes has decreased by 7.1%, indicating ongoing challenges in profitability for airlines [5]. Group 4: Future Outlook - The outlook for the second half of 2025 suggests that the three major airlines may further reduce losses, supported by declining fuel costs and a surge in outbound travel demand [4]. - However, the recovery path is complicated by factors such as consumer travel willingness, weather conditions, and ongoing competition from high-speed rail [6].

Market Overview - The Shanghai Composite Index is at 3500.42 points, slightly down by 0.13%, with a total trading volume of 674.96 billion yuan [1] - As of now, 50 A-shares have surpassed their annual line, indicating a positive market sentiment [1] Notable Stocks - The stocks with the highest deviation rates above the annual line include: - Furui Co., Ltd. (300049) with a deviation rate of 5.83% and a daily increase of 7.83% [1] - Haide Co., Ltd. (000567) with a deviation rate of 4.84% and a daily increase of 7.77% [1] - Tianye Co., Ltd. (832023) with a deviation rate of 3.71% and a daily increase of 6.35% [1] - Other stocks that have just crossed the annual line with smaller deviation rates include: - Wansheng Co., Ltd. (002739) with a deviation rate of 2.70% and a daily increase of 3.02% [1] - ST Guandian (688287) with a deviation rate of 2.14% and a daily increase of 2.67% [1] Trading Activity - The trading turnover rate for notable stocks varies, with Furui Co., Ltd. at 4.06% and Haide Co., Ltd. at 2.59% [1] - The latest prices for these stocks are as follows: - Furui Co., Ltd. at 39.40 yuan [1] - Haide Co., Ltd. at 6.52 yuan [1] - Tianye Co., Ltd. at 4.69 yuan [1]

Group 1: Shipping Industry - The shipping industry is expected to see a divergence in freight rates, with crude oil rates softening while refined oil rates are recovering, indicating a potential bottoming out of oil shipping rates during the summer [1] - The current supply-demand dynamics suggest that marginal changes in demand could have a multiplier effect on freight rates, leading to a recommendation for companies like COSCO Shipping Energy and China Merchants Energy [1] - The container shipping sector is facing pressure on profitability due to ongoing tariff policies and a subdued economic outlook in Europe and the US, with a recommendation to monitor COSCO Shipping Holdings for potential alpha opportunities [1][2] Group 2: Aviation Industry - The aviation sector has entered the peak summer travel season, with domestic flight volumes increasing by 3.1% compared to the previous week, and overall flight volumes reaching 112.3% of 2019 levels [2] - The average ticket price for domestic routes has decreased by 6.6% year-on-year, while the passenger load factor has improved by 1.4 percentage points to 84.1% [2] - Investment recommendations include closely tracking ticket price performance during the summer peak and considering opportunities in airlines such as Air China, China Eastern Airlines, and Spring Airlines [2][5] Group 3: Express Delivery Industry - The "anti-involution" policy released on July 1 aims to curb excessive competition in the express delivery sector, which is currently characterized by severe price competition [3] - The introduction of unmanned logistics vehicles is expected to significantly reduce costs for leading companies like SF Express and ZTO Express, with potential cost savings of approximately 2000 yuan per vehicle per month for SF Express [3][4] - Investment recommendations focus on SF Express due to its strong recovery in revenue growth and cost-saving measures, while also monitoring ZTO Express and Yunda Holdings for potential opportunities [3][5][6] Group 4: Overall Investment Recommendations - The report suggests focusing on domestic demand and high-dividend sectors, recommending companies with stable operations and controllable risks, including SF Express, ZTO Express, and China Southern Airlines [5] - The express delivery sector is projected to maintain a growth rate of 21.5% for the year, driven by strong demand from e-commerce platforms [6] - The report emphasizes the importance of monitoring price changes and the stability of franchisees in the express delivery industry to capitalize on the effects of the "anti-involution" policy [6]