CSN(600029) 国泰君安·2024-10-03 07:12Investment Rating - The investment rating for the company is maintained at "Buy" [5] Core Views - The report indicates that the supply and demand in the industry are expected to continue recovering in the first half of 2024, with the company’s main business continuing to reduce losses, excluding the impact of capital increase. The profitability center is anticipated to rise with the recovery of supply and demand, alongside the construction of the Beijing Daxing hub. The report highlights that the airline has an option for benefits from falling oil prices [3][4]. Summary by Sections Financial Performance - The company is projected to have a net profit of -12.3 billion yuan in the first half of 2024, considering a nearly 14 billion yuan investment loss from the capital increase in China Southern Airlines. The main business is expected to continue reducing losses year-on-year [4]. - The company’s fleet size is expected to grow by 6.7% compared to the same period in 2019, with an ASK (Available Seat Kilometers) growth of 6% in the first half of 2024 [4]. - The company achieved a year-on-year increase of 6 percentage points in passenger load factor during the off-peak season, which is higher than in 2019 [4]. Profitability and Cost Management - The company is leveraging opportunities in cross-border e-commerce, with a more than 30% increase in international routes, leading to a year-on-year profit increase of 450 million yuan in Southern Airlines logistics, totaling 1.7 billion yuan [4]. - The report suggests that if the average fuel purchase price decreases by 10%, the estimated annual net profit increases for China Southern Airlines and other airlines would be 4.2 billion yuan, 4.1 billion yuan, 3.5 billion yuan, 530 million yuan, and 470 million yuan respectively [4]. Strategic Developments - The construction of the Beijing Daxing hub is a significant strategic initiative for the company, which is the largest base airline at the Beijing Daxing Airport. The company is expected to benefit from new slot allocation policies [4]. - The report anticipates that as the industry supply and demand recover, the profitability center for domestic routes will rise, and the long-term profitability of international routes is also expected to improve [4].