SA(601021) 兴业证券·2024-09-28 23:37Investment Rating - The report maintains a "Buy" rating for Spring Airlines, with a target price of 54.45 yuan as of September 26, 2024 [2] - The company's P/E ratios for 2024-2026 are projected at 18.1x, 15.5x, and 13.4x respectively, based on the closing price of September 26, 2024 [1] Core Views - Spring Airlines' low-cost strategy and operational efficiency continue to drive profitability, with net profit reaching a historical high in 2023 [1] - The company's domestic route performance remains strong, with a 2.7% year-on-year increase in passenger load factor in H1 2024 [2] - Spring Airlines is expected to benefit from the optimization of supply and demand in the aviation industry, with profitability expected to improve further as aircraft utilization recovers [1][2] Cost Control and Operational Efficiency - Spring Airlines maintains a low cost structure, with unit non-fuel costs showing room for further optimization as aircraft utilization recovers [8] - The company's unit sales expenses in H1 2024 were 0.0045 yuan/ASK, approximately 1/4 of the major airlines and 1/3 of Juneyao Airlines [8] - The company's high direct sales ratio and independent distribution system contribute to its cost advantage [8] Market Demand and Performance - Domestic demand recovery has been strong, with Spring Airlines' domestic capacity increasing by 13.3% year-on-year in H1 2024 [14] - Leisure travel demand has outperformed business travel, with Spring Airlines achieving record-high capacity and passenger numbers during major holidays in 2024 [14] - The company's revenue in H1 2024 reached 9.88 billion yuan, with a net profit of 1.36 billion yuan, marking a 14.1% year-on-year increase in Q2 [13] Capacity Expansion and Resource Acquisition - Spring Airlines has been accumulating capacity during the industry downturn, with its fleet growth rate exceeding the industry average from 2020 to 2023 [21] - The company is expected to benefit from the release of new airport capacity, with major airports expected to increase their handling capacity by over 30% compared to 2019 levels [23] - Spring Airlines has been expanding its presence in key markets, with a significant increase in slots at airports with 20-50 million passenger throughput [28] Low-Cost Strategy and Pricing Power - Spring Airlines' low-cost strategy is becoming increasingly attractive as high-speed rail prices rise, potentially leading to a shift in passenger preference towards air travel [38] - The company's ticket prices are significantly lower than high-speed rail on key routes, with an average price difference of 13.27% in favor of Spring Airlines [40] - The company's revenue per passenger-kilometer (RPK) in 2023 was 0.38 yuan, compared to high-speed rail's 0.51 yuan post-price increase, highlighting its competitive pricing advantage [40] Profitability and Growth Outlook - Spring Airlines' net profit is expected to grow from 2.94 billion yuan in 2024 to 3.98 billion yuan in 2026, with a CAGR of 15.7% [45] - The company's ROE is projected to increase from 14.0% in 2024 to 15.2% in 2026, driven by improved profitability and operational efficiency [45] - Spring Airlines' aircraft utilization is expected to recover, with historical utilization rates reaching up to 11.24 hours per day, indicating significant room for improvement [42]