CSN(SH:600029) Huachuang Securities·2024-09-02 07:43Investment Rating - The report maintains a "Buy" rating for China Southern Airlines (600029) with a target price of 6.42 CNY, representing a 13% upside from the current price of 5.70 CNY [2][4]. Core Views - The airline reported a loss of 1.23 billion CNY in H1 2024, with Q2 losses amounting to 1.98 billion CNY. However, improvements in supply and demand during the peak season are expected to lead to profitability for the airline [2]. - Revenue for H1 2024 reached 84.79 billion CNY, up 18.0% year-on-year, and 40.19 billion CNY for Q2, up 6.4% year-on-year. The losses in both periods were lower than in the same periods of the previous year [2]. - The report highlights significant growth in passenger traffic during the summer peak season, with a notable increase in average passenger volume and load factor [2]. Financial Summary - Revenue and Profitability: - H1 2024 revenue was 84.79 billion CNY, up 18.0% YoY, with a loss of 1.23 billion CNY. Q2 revenue was 40.19 billion CNY, up 6.4% YoY, with a loss of 1.98 billion CNY [2]. - The airline's net profit forecast for 2024-2026 has been adjusted to 0.5 billion, 7.8 billion, and 10.0 billion CNY respectively [2]. - Operational Metrics: - In H1 2024, Available Seat Kilometers (ASK) increased by 21.7% YoY, while Revenue Passenger Kilometers (RPK) rose by 33.5% YoY, with a load factor of 83.1%, up 7.3 percentage points YoY [2]. - For Q2 2024, ASK grew by 11.2% YoY, RPK by 20.3% YoY, and the load factor was 83.2%, up 6.3 percentage points YoY [2]. - Cost Structure: - H1 2024 operating costs were 78.6 billion CNY, up 17.4% YoY, with fuel costs at 29.7 billion CNY, an increase of 18.2% YoY [2]. - Q2 2024 operating costs were 38.8 billion CNY, up 15.5% YoY, with fuel costs at 13.4 billion CNY, up 16.0% YoY [2]. - Earnings Per Share (EPS): - EPS for 2024 is projected at 0.03 CNY, increasing to 0.43 CNY in 2025 and 0.55 CNY in 2026 [2]. Market Conditions - The report notes a significant recovery in domestic air travel, with a 23% increase in passenger volume compared to 2019 levels during the summer peak season [2]. - The average domestic ticket price has decreased by 12% YoY, indicating competitive pricing in the market [2].