Eastern Air Logistics (601156) Minsheng Securities·2025-01-26 00:23Investment Rating - The report gives a "Buy" rating for the company, with a target price of 17.08 CNY [5]. Core Views - The report highlights that Eastern Airlines Logistics is positioned as a leading player in the domestic air cargo sector, benefiting from a robust supply-demand dynamic in the air freight market, which is expected to drive significant growth in revenue and profits [1][4]. Summary by Sections Company Overview - Eastern Airlines Logistics is the first publicly listed air cargo company in China, backed by China Eastern Airlines Group, which holds a 40.5% stake in the company [1][9]. - The company has seen a continuous increase in its profit margins, with net profit margins rising from 5%-10% (2016-2019) to over 10% since 2020, reaching a net profit of 2.07 billion CNY in Q1-Q3 2024, a 24% year-on-year increase [1][21]. Industry Dynamics - The air cargo market is experiencing a tightening supply of freighter aircraft, which is expected to push freight rates higher. The global freighter fleet accounts for less than 8% of total air cargo capacity but handles 54% of air cargo volume [2][37]. - Demand for air cargo is benefiting from global economic growth and the rapid expansion of cross-border e-commerce, with a reported 11.8% year-on-year increase in global air cargo demand in 2024 [2][41]. Competitive Advantages - Eastern Airlines Logistics has established significant resource barriers, including a fleet of 14 B777 freighters with an average age of 3.5 years and exclusive access to cargo operations on nearly 800 passenger aircraft [3][16]. - The company has a comprehensive ground service network, with 17 self-operated cargo stations covering key air cargo hubs, enhancing its operational efficiency [3][15]. Financial Projections - The company is projected to achieve revenues of 24.45 billion CNY in 2024, with net profits expected to reach 2.72 billion CNY, reflecting a 9.3% growth year-on-year [4][19]. - Earnings per share (EPS) are forecasted to grow from 1.57 CNY in 2023 to 2.41 CNY by 2026, with a price-to-earnings (PE) ratio decreasing from 11 to 7 over the same period [4][19]. Conclusion - The report concludes that Eastern Airlines Logistics is well-positioned to capitalize on the growing demand for air cargo services, particularly in the cross-border e-commerce sector, and is expected to see substantial growth in both revenue and profitability in the coming years [4][30].