Guoxin Securities·2024-03-31 16:00Investment Rating - The report maintains a "Buy" rating for China National Aviation (601111.SH) [1][4][18] Core Views - The performance of China National Aviation is expected to improve significantly in 2024, driven by the recovery of Cathay Pacific's investment returns and the overall recovery in the aviation sector [1][18] - The company reported a substantial reduction in losses for 2023, with operating revenue reaching 141.1 billion yuan, a year-on-year increase of 166.7%, and a net profit attributable to shareholders of -1.05 billion yuan [1][5] - The recovery in domestic demand is rapid, while international demand is recovering at a slower pace [1][7] Summary by Relevant Sections Financial Performance - In 2023, the passenger transport volume, revenue passenger kilometers (RPK), and available seat kilometers (ASK) reached 109%, 92%, and 102% of 2019 levels, respectively, with a seat load factor of 73.22%, down 7.81 percentage points from 2019 [1][7] - Domestic routes showed stronger recovery, with RPK and ASK at 128% and 142% of 2019 levels, respectively, while international routes lagged at 37% and 44% [1][7] - The company achieved passenger revenue of 130.52 billion yuan in 2023, a significant increase of 241% year-on-year, while cargo revenue fell to 4.17 billion yuan, down 58.7% [1][7] Cost and Profitability - Operating costs for 2023 were 134.02 billion yuan, up 61.8% year-on-year, with fuel costs at 46.73 billion yuan, increasing by 105.3% [1][13] - The unit cost decreased significantly, with unit ASK fuel cost at 0.160 yuan, down 32.5%, and unit ASK non-fuel cost at 0.298 yuan, down 52.2%, leading to a recovery in gross margin [1][13] Investment Income and Currency Impact - The investment income from Cathay Pacific amounted to 2.43 billion yuan, contributing to a total investment income of 3.05 billion yuan for the year [1][17] - Currency depreciation resulted in an exchange loss of 1.035 billion yuan, with a sensitivity analysis indicating that a 1% change in the RMB/USD exchange rate would affect net losses by approximately 229 million yuan [1][17] Future Projections - The forecast for net profit attributable to shareholders for 2024-2026 is set at 9.12 billion, 13.36 billion, and 15.94 billion yuan, respectively, reflecting downward adjustments due to macroeconomic pressures and slower international route recovery [1][18][21]