SINOLINK SECURITIES·2024-08-31 04:15Investment Rating - The report maintains a "Buy" rating for Air China (601111.SH) [1] Core Views - The company's operating performance has significantly improved, with a notable recovery in business conditions expected [1] - The international travel policies are encouraging, which is anticipated to benefit the company due to its high proportion of wide-body aircraft [1] Financial Performance Summary - For H1 2024, Air China reported operating revenue of 79.52 billion RMB, a year-on-year increase of 33.4%. The net profit attributable to shareholders was -2.78 billion RMB, a reduction in losses by 670 million RMB [1] - In Q2 2024, the company achieved operating revenue of 39.45 billion RMB, a year-on-year growth of 14.2%, with a net profit of -1.11 billion RMB, an increase in losses by 580 million RMB [1] - Passenger revenue reached 73.1 billion RMB in H1 2024, up 17.7 billion RMB year-on-year, while cargo revenue was 3.3 billion RMB, an increase of 1.9 billion RMB [1] - The company's unit cost per seat kilometer decreased to 0.45 RMB, down 1.89% year-on-year, and the gross margin improved to 2.6%, an increase of 1.9 percentage points [1] Business Analysis - The increase in business volume led to a significant rise in revenue, with RPK (Revenue Passenger Kilometers) growing by 50% year-on-year, primarily due to the consolidation of Shandong Airlines and increased demand [1] - The company benefited from a decrease in financial expense ratios, which dropped significantly due to reduced foreign exchange losses [1] - The government policies promoting international tourism are expected to enhance the recovery of international routes, which are advantageous for the company [1] Profit Forecast and Rating - The net profit forecasts for 2024-2026 have been revised down to -1.7 billion RMB, 7.4 billion RMB, and 12.1 billion RMB respectively [1]