CSN(SH:600029)2024-03-27 16:00Investment Rating - The report maintains an "Outperform" rating for the company, Southern Airlines [8]. Core Views - The company reported a significant narrowing of losses in 2023, with a net loss of 4.21 billion yuan, which aligns with market expectations. Revenue increased by 83.7% year-on-year to 159.9 billion yuan, driven by the recovery of domestic air travel post-pandemic, despite slower recovery in international routes and high oil prices [8][9]. - The operational data indicates a recovery in domestic air travel, with ASK (Available Seat Kilometers) and RPK (Revenue Passenger Kilometers) returning to 113% and 106% of 2019 levels, respectively. However, international operations remain below pre-pandemic levels, with ASK and RPK at 45% and 43% of 2019 levels [8][9]. - The company plans to adjust its fleet growth, with a projected fleet size of 948 and 965 aircraft by the end of 2024 and 2025, respectively, down from previous forecasts [8]. Summary by Sections Financial Performance - In 2023, the company achieved total revenue of 159.9 billion yuan, a year-on-year increase of 83.7%. Passenger revenue rose by 126.89% to 136.17 billion yuan, while cargo revenue decreased by 26.86% to 15.27 billion yuan [9][10]. - The average Brent crude oil price in 2023 was 83 USD, significantly higher than pre-pandemic levels, leading to a unit cost increase of 17% compared to 2019 [8][9]. Profitability Metrics - The company recorded a net loss of 4.21 billion yuan in 2023, a substantial improvement from the previous year's loss of 32.68 billion yuan. The projected net profit for 2024 is 693.7 million yuan, with further increases expected in subsequent years [9][10]. - The report forecasts a gradual recovery in profitability, with expected earnings per share of 0.38 yuan in 2024, 0.68 yuan in 2025, and 0.86 yuan in 2026 [9][10]. Market Outlook - The domestic market is expected to see a strong recovery in 2024, while international recovery is anticipated to lag, with the company expected to outperform its peers in the industry [8][9]. - The report suggests that the company's valuation remains attractive compared to industry averages, maintaining a favorable outlook for investors [8].