Huachuang Securities·2024-04-27 11:01Investment Rating - The report maintains a "Strong Buy" rating for China National Airlines (601111) with a target price of 9.22 CNY, indicating a potential upside of 21% from the current price of 7.61 CNY [2][6]. Core Insights - In Q1 2024, China National Airlines reported a revenue of 40.07 billion CNY, a year-on-year increase of 59.8%, and a reduction in net loss to 1.67 billion CNY, down from a loss of 2.93 billion CNY in Q1 2023 [2][3]. - The airline's operating metrics showed significant improvement, with ASK (Available Seat Kilometers) up 45.3% year-on-year and RPK (Revenue Passenger Kilometers) up 62.7% year-on-year, leading to a passenger load factor of 79.5%, an increase of 8.5 percentage points year-on-year [2][3]. - The report highlights a positive outlook for the upcoming May Day holiday, with expectations of increased travel demand, particularly for long-distance domestic trips [2][3]. Financial Summary - Revenue and Profitability: The total revenue for 2023 was 141.1 billion CNY, with a projected growth to 169.6 billion CNY in 2024, reflecting a year-on-year growth rate of 20.2% [3][14]. The net profit is expected to recover significantly, with estimates of 3.2 billion CNY in 2024, compared to a loss of 1.05 billion CNY in 2023 [3][14]. - Earnings Per Share (EPS): The EPS is projected to improve from -0.06 CNY in 2023 to 0.19 CNY in 2024, with further increases to 0.61 CNY and 0.80 CNY in 2025 and 2026, respectively [3][14]. - Valuation Metrics: The price-to-earnings (P/E) ratio is expected to be 39 in 2024, decreasing to 12 in 2025 and 9 in 2026, indicating improving profitability and valuation [3][14]. Operational Metrics - Fleet Expansion: As of March 2024, the airline's fleet consists of 911 aircraft, with plans to add 33, 24, and 55 new aircraft in the years 2024 to 2026, respectively [2][3]. - Cost Management: Operating costs increased by 47.1% year-on-year to 38.7 billion CNY in Q1 2024, with fuel costs rising by 66.1% to 13.7 billion CNY [2][3]. The report notes a decrease in unit costs, with seat kilometer costs down by 9.3% year-on-year [2][3].