Air China(601111) 华创证券·2024-11-01 15:40Investment Rating - The report maintains a "Buy" rating for China National Aviation (601111) with a target price of 8.45 CNY, representing a 15% upside from the current price of 7.33 CNY [2][6]. Core Insights - The company reported a slight decline in Q3 2024 profit of 4.7% year-on-year, amounting to 4.14 billion CNY, while revenue increased by 6.0% year-on-year to 48.63 billion CNY [1][5]. - For the first three quarters of 2024, total revenue reached 128.15 billion CNY, up 21.5% year-on-year, with a net profit of 1.36 billion CNY, a significant increase of 72.1% year-on-year [1][5]. - The report highlights the potential for strong price elasticity in the aviation sector due to supply-demand gaps, especially if oil prices decline [1][5]. Financial Summary - Revenue and Profit: - Q3 2024 revenue was 48.63 billion CNY, up 6.0% year-on-year, while profit was 4.14 billion CNY, down 2.3% year-on-year [1][5]. - For the first three quarters of 2024, revenue was 128.15 billion CNY, up 21.5% year-on-year, and net profit was 1.36 billion CNY, up 72.1% year-on-year [1][5]. - Cost and Expenses: - Q3 2024 operating costs were 42.3 billion CNY, an increase of 10.8% year-on-year, with fuel costs estimated at 14.6 billion CNY, down 2.9% year-on-year [1][5]. - The total operating cost for the first three quarters of 2024 was 119.7 billion CNY, up 23.0% year-on-year [1][5]. - Key Ratios: - The passenger load factor for Q3 2024 was 81.0%, an increase of 5.5 percentage points year-on-year [1][5]. - The earnings per share (EPS) for 2024 is projected at 0.01 CNY, with a price-to-earnings (PE) ratio of 887 [1][7]. Market Outlook - The report suggests that the aviation sector is a classic cyclical industry, and once demand picks up, the supply growth will lag, leading to significant price increases [1][5]. - The anticipated decline in aviation fuel prices could further enhance profit margins, similar to trends observed in 2014-2015 [1][5].