SA(SH:601021) HTSC·2025-10-31 10:51Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 75.50 [1][10]. Core Views - The company is expected to benefit from an improving industry environment, with a focus on its position as a leading low-cost airline in China. The report highlights the potential for revenue growth driven by increased demand for low-cost travel and improved pricing dynamics in the industry [6][9]. Financial Performance - For the first nine months of 2025, the company reported revenue of RMB 16.773 billion, a year-on-year increase of 5.0%. However, the net profit attributable to the parent company was RMB 2.336 billion, a decrease of 64.69% year-on-year [6]. - In Q3 2025, the company achieved revenue of RMB 6.469 billion, reflecting a 6.0% year-on-year increase, while the net profit was RMB 1.167 billion, down 6.2% year-on-year [7][8]. Operational Metrics - The company experienced a 14.1% increase in capacity and a 14.0% increase in demand in Q3, with a slight decline in passenger load factor to 92.5%. Domestic capacity growth was notably strong at 11.4% [7]. - The average aircraft utilization in the first half of 2025 was 9.7 hours, below the 11.2 hours recorded in the first half of 2019, indicating room for operational efficiency improvements [9]. Revenue and Profitability Forecast - Revenue projections for the upcoming years are as follows: RMB 20 billion in 2024, RMB 21.059 billion in 2025, RMB 23.774 billion in 2026, and RMB 26.888 billion in 2027, with growth rates of 11.50%, 5.30%, 12.89%, and 13.10% respectively [5]. - The net profit attributable to the parent company is forecasted to be RMB 2.273 billion in 2025, with an expected EPS of RMB 2.30 [10]. Valuation Metrics - The report provides valuation metrics including a PE ratio of 22.96 for 2024, decreasing to 14.58 by 2027, and a PB ratio of 3.00 for 2024, decreasing to 2.21 by 2027 [5][10]. - The target price is based on a projected PB of 3.5x for 2026, with a BPS of RMB 21.56 [10].