EBSCN·2024-03-30 16:00Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of China Eastern Airlines, with a current price of 3.64 CNY for A-shares and 1.95 HKD for H-shares [2]. Core Views - The company reported a significant reduction in losses for 2023, with a revenue of 113.74 billion CNY, a 147% increase year-on-year, and a net loss of 8.168 billion CNY, down from a loss of 37.4 billion CNY in the previous year [2]. - The recovery in operational performance is noted, although international routes are still lagging behind. The available seat kilometers (ASK) increased by 155% year-on-year, but still down 9% compared to 2019 levels [2]. - Passenger kilometer revenue remains high, with a 0.574 CNY per passenger kilometer, a 15.4% increase compared to 2019, but total passenger revenue is still 5.2% lower than 2019 levels [2]. - The gross margin for 2023 was 1.13%, showing improvement from negative margins in the previous year, but still down 10.17 percentage points from 2019 [2]. - The forecast for net profit is 5.024 billion CNY for 2024, 7.038 billion CNY for 2025, and 9.020 billion CNY for 2026, indicating a positive outlook for profitability as the airline industry continues to recover [2]. Summary by Sections Financial Performance - 2023 Revenue: 113.74 billion CNY, up 147% YoY - 2023 Net Loss: 8.168 billion CNY, improved from 37.4 billion CNY in 2022 - 2023 Passenger Revenue: 1,046 billion CNY, up 199% YoY, but down 5.2% from 2019 [2][5] Operational Metrics - ASK growth: 155% YoY, but down 9% from 2019 - Domestic ASK up 16% from 2019, while international ASK at 44% of 2019 levels [2] - 2023 Comprehensive Load Factor: 74.41%, up 10.71 percentage points YoY, but down 7.6 percentage points from 2019 [2] Cost and Margin Analysis - Main business costs increased by 50.5% YoY due to market recovery - 2023 Gross Margin: 1.13%, improved from negative margins in 2022, but down from 11.3% in 2019 [2] - Significant increases in variable costs such as landing fees and fuel costs [2] Future Outlook - Expected net profit for 2024: 5.024 billion CNY, with continued recovery anticipated in 2025 and 2026 [2] - The report suggests that the airline's profitability will be positively impacted as international routes recover and demand increases [2]