Shenwan Hongyuan Securities·2025-10-09 09:22Investment Rating - The report gives an "Overweight" rating for the aviation industry, indicating a positive outlook for the sector's performance compared to the overall market [8]. Core Insights - The National Day holiday data for the aviation industry exceeded expectations, signaling an upcoming golden era for airlines. The domestic aviation market showed stable performance despite adverse weather conditions, with daily passenger transport volume averaging approximately 2.15 million, a 31% increase compared to 2019 and a 4% increase compared to 2024 [2]. - The growth in passenger volume is primarily dependent on the increase in aircraft numbers, and a low growth rate in passenger volume amidst high load factors is seen as a positive indicator for profitability. If fleet size does not grow, passenger volume may stagnate or decline, leading to potential supply-demand mismatches and price fluctuations [2]. - The report highlights two misconceptions in the market: first, the belief that the recovery of Boeing and Airbus production capacity will reverse the aging trend of aircraft; second, the notion that lower ticket prices will negatively impact airline profitability. The report argues that many domestic airlines have already surpassed 2019 levels in international market recovery, and as long as the reduction in unit costs exceeds the decline in unit revenues, airline profitability will improve [2]. - The Chinese civil aviation sector is entering a golden age, expected to last 5-10 years, driven by supply chain improvements. Short-term indicators include record profits for major airlines during the National Day holiday, while medium-term expectations include a transition from losses to profitability for airlines [2]. - Investment recommendations include focusing on the aviation sector, with a strong supply-side logic and elastic demand. Airlines such as China Eastern Airlines, Spring Airlines, and China Southern Airlines are highlighted as potential investment opportunities, along with global aircraft leasing companies and airport sectors showing continuous recovery [2][3]. Summary by Sections - Passenger Transport Data: Daily domestic passenger transport volume reached approximately 2.15 million, with a 31% increase from 2019 and a 4% increase from 2024. Daily domestic flight volume averaged about 14,500 flights, a 19% increase from 2019 and a 2% increase from 2024 [2]. - International Market Performance: Daily international passenger transport volume averaged around 380,000, a 13% decrease from 2019 but an 11% increase from 2024. The average ticket price for international flights decreased by 12% compared to 2024 [2]. - Company Valuation Table: Key companies in the aviation sector, such as China Southern Airlines and China Eastern Airlines, have been rated as "Outperform" or "Buy," with projected earnings per share (EPS) growth indicating strong future performance [3].