Guoxin Securities·2025-09-04 07:53Investment Rating - The investment rating for the company is "Outperform the Market" [6][30]. Core Views - The company has shown improvement in its financial performance for Q2 2025, with a reduction in losses. The total revenue for the first half of 2025 was 66.822 billion yuan, a year-on-year increase of 4.09%, with a net profit attributable to shareholders of -1.431 billion yuan, compared to -2.768 billion yuan in the same period last year [1][9]. - Despite a significant increase in passenger transport volume and seat utilization, the revenue per available seat kilometer (RPK) has declined, indicating pressure on earnings due to oversupply in the industry [2][4]. - The company is expected to face challenges in profitability due to a weak domestic economy and competitive pricing in the airline sector, leading to a downward revision of profit forecasts for 2025-2027 [4][30]. Financial Performance Summary - In Q2 2025, the company achieved a revenue of 33.416 billion yuan, a year-on-year increase of 7.76%, with a net profit of -0.436 billion yuan, improving from -1.965 billion yuan in the same quarter last year [1][9]. - The passenger transport volume, revenue passenger kilometers (RPK), and available seat kilometers (ASK) increased by 9.55%, 13.61%, and 8.47% respectively in Q2 2025, with a seat utilization rate of 85.63%, up 3.87 percentage points year-on-year [2][11]. - The company's operating costs for Q2 2025 were 31.789 billion yuan, a year-on-year increase of 3.29%, while the unit cost per ASK decreased by 4.71% to 0.41 yuan [3][17]. Profit Forecasts - The profit forecasts for the company have been adjusted downwards, with expected net profits of 1.08 billion yuan, 3.60 billion yuan, and 5.97 billion yuan for 2025, 2026, and 2027 respectively, reflecting a significant reduction in expectations for 2025 and 2026 [4][30]. - The company is projected to see a gradual recovery in profitability, with a return to positive net income expected by 2025 [4][30]. Valuation Comparisons - The company is compared with peers, showing that its price-to-earnings (PE) ratio for 2025 is significantly higher than that of comparable companies, indicating a potential undervaluation relative to its peers by 2027 [29][31].