CEA(SH:600115) Huachuang Securities·2024-09-02 05:50Investment Rating - The report maintains a "Recommended" rating for China Eastern Airlines (600115) with a target price of 4.49 CNY, representing a 19% upside from the current price of 3.79 CNY [2][4]. Core Views - The company reported a loss of 2.77 billion CNY in H1 2024, with Q2 losses amounting to 1.97 billion CNY. However, profitability is expected to improve during the peak travel season [2]. - Revenue for H1 2024 reached 64.2 billion CNY, a year-on-year increase of 29.7%, while losses increased by 55.8% compared to the previous year [2]. - The airline industry is seeing significant growth in passenger volume during the summer peak season, with a notable increase in average passenger load factor [2]. Financial Summary - Revenue and Profitability: - H1 2024 revenue was 64.2 billion CNY, up 29.7% year-on-year. Q2 revenue was 31.01 billion CNY, up 13.9% year-on-year [2]. - H1 2024 net loss was 2.77 billion CNY, with a Q2 loss of 1.97 billion CNY, reflecting an 18.7% increase in losses year-on-year for Q2 [2][8]. - Operational Metrics: - In H1 2024, Available Seat Kilometers (ASK) increased by 32.8% year-on-year, while Revenue Passenger Kilometers (RPK) rose by 50.3% [2]. - The passenger load factor for H1 2024 was 81.2%, an increase of 9.4 percentage points year-on-year [2]. - Cost Structure: - H1 2024 operating costs were 62.5 billion CNY, a year-on-year increase of 23.1%, with fuel costs rising by 33.6% to 23.3 billion CNY [2]. - The cost per seat kilometer (excluding fuel) was 0.272 CNY, down 11.5% year-on-year [2]. - Future Earnings Forecast: - The report adjusts the profit forecast for 2024-2026, estimating net profits of 0.21 billion CNY, 5.9 billion CNY, and 8.5 billion CNY respectively, with corresponding EPS of 0.00, 0.26, and 0.38 CNY [2][8]. - Valuation Metrics: - The target market capitalization is set at 100.1 billion CNY, with a price-to-book (PB) ratio of 1.5 times based on historical averages [2]. Industry Outlook - The report highlights a significant improvement in the supply-demand dynamics of the airline industry during the peak summer travel season, with a notable increase in domestic passenger volume and load factors [2].