SA(SH:601021) Huachuang Securities·2024-08-31 13:40Investment Rating - The report maintains a "Strong Buy" rating for Spring Airlines (601021) [1] Core Views - The company reported a net profit of 1.36 billion RMB for H1 2024, a year-on-year increase of 62.3%, exceeding the upper limit of the profit forecast [1] - The report highlights the strong performance of low-cost airlines, particularly Spring Airlines, in the current economic environment [1] Financial Performance Summary - H1 2024 Financials: Revenue reached 9.88 billion RMB, up 23.0% year-on-year, with a net profit of 1.36 billion RMB, surpassing the forecast range of 1.29 to 1.34 billion RMB [1] - Q2 2024 Financials: Revenue was 4.71 billion RMB, a 12.9% increase year-on-year, with a net profit of 550 million RMB, also exceeding the forecast [1] - Operating Data: In H1 2024, ASK (Available Seat Kilometers) increased by 21.5% year-on-year, while RPK (Revenue Passenger Kilometers) rose by 26.1% [1] - Cost Structure: H1 2024 operating costs were 8.4 billion RMB, a 20.7% increase year-on-year, with fuel costs at 3.11 billion RMB, up 23.8% [1] Profit Forecasts - The report adjusts profit forecasts for 2024-2026, estimating net profits of 2.82 billion, 3.32 billion, and 3.82 billion RMB respectively, with corresponding EPS of 2.89, 3.40, and 3.91 RMB [1] - The report anticipates a seasonal increase in demand during peak travel periods, which may enhance airline profitability [1] Target Price and Valuation - The target price for Spring Airlines is set at 61.1 RMB, representing a 21% upside from the current price of 48.56 RMB [3] - The report assigns a PE ratio of 18 times for the 2025 earnings forecast, leading to a target market value of 59.8 billion RMB [1]