HTSC·2024-09-03 08:03Investment Rating - The investment rating for the company is "Buy" (maintained) with a target price of HKD 5.50 and RMB 8.80 [2][3][8] Core Views - The company reported a net loss of RMB 2.782 billion in 1H24, which is an improvement compared to a net loss of RMB 3.451 billion in 1H23. However, the net loss in Q2 2024 expanded by RMB 584 million to RMB 1.108 billion due to weak revenue levels during the industry off-season [3][4][7] - The report anticipates a gradual recovery in supply and demand in the aviation sector, with expectations for improved profitability driven by high-quality routes and resource advantages [8][19] Summary by Sections Financial Performance - 1H24 operating revenue reached RMB 79.52 billion, a year-on-year increase of 33.4%, while the net loss was RMB 2.782 billion, aligning with the performance forecast [3][4] - Q2 2024 saw operating costs of RMB 38.741 billion, up 17.8%, leading to a gross profit of RMB 714 million, a decline of RMB 940 million year-on-year [7] - The company adjusted its 2024-2026 net profit forecasts to RMB 0.520 billion, RMB 5.196 billion, and RMB 8.279 billion respectively, reflecting a slower recovery in supply-demand dynamics [3][19] Operational Metrics - In Q2 2024, the company achieved a capacity increase of 13.1% and demand growth of 26.9%, with a passenger load factor of 79.0%, an increase of 8.6 percentage points year-on-year [4][8] - The unit revenue per passenger kilometer decreased by approximately 19%, indicating pressure on revenue despite a recovery in capacity and demand [4][8] Valuation and Estimates - The report maintains a price-to-book (PB) ratio of 3.5x for A-shares and 2.0x for H-shares, with a projected book value per share (BPS) of RMB 2.52 for 2024 [3][8] - The target prices have been adjusted to RMB 8.80 for A-shares and HKD 5.50 for H-shares, down from previous estimates of RMB 9.90 and HKD 6.20 respectively [8][19]