Hainan Airlines Holding(SH:600221)2024-07-01 13:30Investment Rating - The report indicates a critical situation for Hainan Airlines, with concerns about its potential delisting due to stock price nearing par value [1][2][27]. Core Viewpoints - Hainan Airlines has shown a strong recovery, being the first among the four major airlines in China to report profitability post-pandemic, with a net profit of 311 million RMB in 2023, marking a significant turnaround after substantial losses in previous years [3][6][19]. - The airline's revenue for 2023 reached 58.641 billion RMB, a year-on-year increase of 156.48%, reflecting a robust recovery in the aviation sector [6][19]. - Despite the positive performance, Hainan Airlines still faces significant debt challenges, with total liabilities amounting to 132.458 billion RMB, and a high proportion of interest-bearing debt [23][25]. Summary by Sections Financial Performance - In 2023, Hainan Airlines achieved a total revenue of 58.641 billion RMB, a 156.48% increase from the previous year, and a net profit of 311 million RMB, marking its first profit since the pandemic [6][19]. - The first quarter of 2024 saw a revenue of 17.549 billion RMB, up 33.48% year-on-year, with a net profit of 687 million RMB, a 334.51% increase [6][19]. Operational Metrics - Hainan Airlines operated 334 aircraft by the end of 2023, which is significantly lower than its competitors, impacting its revenue potential [15][18]. - The airline's passenger load factor and overall utilization rates were relatively high, at 81%, indicating efficient operations compared to peers [17][18]. Market Outlook - The global aviation market is expected to exceed pre-pandemic levels in 2024, with domestic markets projected to recover to pre-pandemic levels by the end of 2024, maintaining a growth rate of 5.5%-6.5% [22][21]. - The upcoming summer travel season and the advantages of being located in Hainan Free Trade Port are expected to boost Hainan Airlines' performance [21][22]. Debt and Financial Stability - Hainan Airlines' total liabilities stood at 132.458 billion RMB at the end of 2023, with interest-bearing debt comprising 79% of total liabilities, raising concerns about its debt repayment capacity [23][25]. - The airline's EBITDA interest coverage ratio was 3.32, indicating that while it can meet its interest obligations, the overall debt situation remains a significant concern [25][26].