Core Viewpoint - The company is reaffirmed with a "Buy" rating and a target price of 12.55 yuan, corresponding to a 22x PE for 2025, indicating strong growth potential in the regional aviation market [1] Short-term Outlook - The fleet is expected to expand to 75 aircraft by the end of 2024, with a compound annual growth rate (CAGR) of 9.3% from 2019 to 2024 [2] - The number of captains is improving, reaching 300 by the end of 2024, with the ratio of captains per aircraft recovering to 82% of 2019 levels [2] - Enhanced fleet turnover efficiency is anticipated to drive significant profit growth in 2025 and 2026, alongside government subsidies and improved revenue levels [2] Mid-term Outlook - The new government subsidy policy for regional airlines is expected to significantly increase unit hour subsidies, benefiting the company's profitability [2] - Other revenues are projected to reach 1.29 billion yuan and 360 million yuan in Q1 2024 and Q1 2025, respectively, reflecting year-on-year increases of 144.8% and 47.8% [2] - The company is expected to benefit from favorable trends in oil prices and exchange rates, leading to a continued recovery in single aircraft profitability [2] Long-term Outlook - The company has established a strong position in the challenging regional aviation market, with 84% of its routes being independent flights by 2024 [3] - The company holds a 21% market share in the regional market for cities below the third tier, leading the industry [3] - The demand for regional air travel is expected to grow, supported by local government initiatives to enhance regional connectivity and the construction of new airports [3] Market Perspective - The market underestimates the barriers to entry in the regional aviation sector and overestimates potential competition from traditional airlines [4] - The regional aviation market remains a blue ocean, with 185 regional airports handling fewer than 2 million passengers, indicating significant untapped demand [4] Profit Forecast and Valuation - The company's net profit forecasts for 2025-2027 have been slightly adjusted to 729 million, 1.141 billion, and 1.342 billion yuan, respectively, with a CAGR of 71.1% [5] - The target price has been raised to 12.55 yuan, based on a revised average PE multiple of 22x for comparable companies [5]

Investment Rating - The report maintains a "Strong Buy" rating for Huaxia Airlines, expecting it to outperform the benchmark index by over 20% in the next six months [2][19]. Core Views - The company is projected to achieve a net profit of 2.55 billion yuan in the first half of 2025, representing a year-on-year increase of approximately 875% [1]. - The report emphasizes the continuous improvement in the company's operations, driven by a decrease in oil prices, which is expected to reduce costs and sustain profitability [2]. - The target price for the stock is set at 11.3 yuan, indicating a potential upside of 31% from the current price of 8.65 yuan [2][3]. Financial Performance Summary - For 2025, the expected total revenue is 8.112 billion yuan, with a year-on-year growth rate of 21.1% [3]. - The projected net profit for 2025 is 717 million yuan, reflecting a significant year-on-year growth of 167.6% [3]. - Earnings per share (EPS) for 2025 is estimated at 0.56 yuan, with a price-to-earnings (PE) ratio of 15 times [3]. Operational Data Summary - In the first half of 2025, Huaxia Airlines is expected to operate an average of 382 flights per day, a year-on-year increase of 19.9% [8]. - The average aircraft utilization rate improved to 7 hours per day, an increase of 0.6 hours compared to the previous year [8]. - The company has been actively optimizing its route network to meet the changing travel demands, which has contributed to an increase in passenger load factors [8].

Core Viewpoint - The company, Huaxia Airlines, is changing the use of raised funds and the implementation subject of some fundraising investment projects to improve fund utilization efficiency and support its main business development [1][8][25]. Fundraising Basic Situation - Huaxia Airlines raised a total of approximately RMB 2.43 billion through a non-public offering of shares, with a net amount of approximately RMB 2.41 billion after deducting issuance costs [1]. - The company issued 264,673,906 shares at a price of RMB 9.20 per share, with the approval from the China Securities Regulatory Commission [1]. Fundraising Usage Situation - As of March 31, 2025, the total amount planned for investment in projects was RMB 406,894.40 million, with cumulative investment of RMB 240,960.20 million and unutilized funds of RMB 141,593.14 million [2]. - The project "Introduction of 4 A320 series aircraft" has not yet formed assets, with cumulative investment being partial prepayment for 2 aircraft [2]. Change in Fundraising Purpose and Project Implementation Subject - The company plans to change the implementation subject of the project "Introduction of 4 A320 series aircraft" from Huaxia Airlines to its wholly-owned subsidiary, Yunfei Aircraft Leasing [8][10]. - The total amount for the new project "Introduction of 5 C909 series aircraft" is RMB 92,500.00 million, which will be funded from the remaining funds [9][12]. Reasons for Change - The change is driven by the need to ensure the normal operation of aircraft and to adapt to macroeconomic conditions and supplier delivery speeds [10][11]. - The company aims to enhance fund utilization efficiency and support its strategic development in the regional aviation market [10][14]. New Investment Project Situation - The new project involves the introduction of 5 C909 series aircraft, with an estimated investment of RMB 92,500.00 million [12]. - The expected delivery of the aircraft is anticipated to be completed within the year 2025 [12]. Impact of Changes on the Company - The changes are expected to align with the company's strategic development needs and improve the efficiency of fund utilization, without harming the interests of the company and its shareholders [23][25]. - The company remains focused on the regional aviation market, which is projected to grow due to increasing demand for air travel in smaller cities [14][16].

Investment Rating - The report gives a "Recommended" rating for the company, indicating a potential upside of over 15% relative to the benchmark index [6][8]. Core Views - The company achieved a revenue of 6.7 billion yuan in 2024, a year-on-year increase of 30%, and a net profit of 270 million yuan, recovering from a net loss of 960 million yuan in the previous year [3][4]. - The company is expected to continue its growth trajectory, with projected net profits of 620 million yuan, 780 million yuan, and 1.06 billion yuan for 2025, 2026, and 2027 respectively [6][7]. Summary by Sections Financial Performance - In 2024, the company reported an operating income of 6.7 billion yuan, with a net profit of 270 million yuan, compared to a net loss of 960 million yuan in the previous year [3]. - The fourth quarter of 2024 saw an operating income of 1.54 billion yuan, a 19% increase year-on-year, and a net loss of 40 million yuan, improving from a loss of 270 million yuan in the same quarter of the previous year [3][4]. - For the first quarter of 2025, the company reported an operating income of 1.77 billion yuan, a 10% increase year-on-year, with a net profit of 82 million yuan [3]. Operational Insights - The company has seen a 33% year-on-year increase in available seat kilometers in 2024, which is expected to continue into 2025 due to fleet growth and improved flight utilization [4]. - The revenue structure is robust, with individual and institutional distribution income contributing 78% and 22% to passenger revenue respectively [5]. Future Projections - The company is projected to achieve operating revenues of 7.4 billion yuan in 2025, with a growth rate of 10.7% [7]. - The net profit is expected to grow significantly, with a forecasted increase of 129.3% in 2025 [7][11]. - The report anticipates a continued increase in unit operating income due to new subsidy regulations and strategic adjustments in capacity deployment [5][6].

Core Viewpoint - The company has shown significant recovery in operations and profitability in 2024 and Q1 2025, with a notable increase in revenue and net profit compared to previous periods [1][2][3]. Financial Performance - In 2024, the company achieved operating revenue of 6.696 billion yuan, a year-on-year increase of 29.98%, and a net profit attributable to shareholders of 268 million yuan, with a non-recurring net profit of 112 million yuan, marking a turnaround from losses in 2023 [1]. - In Q4 2024, the company reported operating revenue of 1.542 billion yuan, a year-on-year increase of 18.62%, but a net loss of 39 million yuan [1]. - In Q1 2025, the company achieved operating revenue of 1.774 billion yuan, a year-on-year increase of 9.78%, and a net profit attributable to shareholders of 82 million yuan, representing a 232.31% increase [1]. Operational Metrics - As of Q1 2025, the company operated a fleet of 77 aircraft, with 47 regional aircraft (61%) and 30 trunk aircraft (39%) [2]. - In 2024, the company’s available seat kilometers (ASK) and revenue passenger kilometers (RPK) grew by 33.21% and 40.72% year-on-year, respectively, with a load factor of 79.61%, up 4.25 percentage points [2]. - In Q1 2025, ASK and RPK increased by 23.73% and 28.08% year-on-year, respectively, with a load factor of 79.75%, up 2.71 percentage points [2]. Cost and Revenue Analysis - In 2024, the revenue per seat kilometer was 0.4221 yuan, up 0.74% year-on-year, while the cost per seat kilometer was 0.4251 yuan, down 10.42% year-on-year [3]. - In Q1 2025, the revenue per seat kilometer decreased to 0.3974 yuan, down 11.27% year-on-year, while the cost per seat kilometer was 0.4042 yuan, down 8.40% year-on-year [3]. - Other income for 2024 reached 1.293 billion yuan, benefiting from revised regional airline subsidy policies, and in Q1 2025, other income grew by 47.56% year-on-year to 363 million yuan [3]. Profit Forecast and Investment Outlook - The company adjusted its net profit forecasts for 2025-2026 to 702 million yuan and 1.013 billion yuan, respectively, with a new forecast for 2027 at 1.203 billion yuan, corresponding to P/E ratios of 13.7X, 9.5X, and 8.0X [3]. - As the only large-scale independent regional airline in China, the company is expected to benefit from the revised regional airline subsidy policies and improved operational conditions, projecting significant year-on-year growth in 2024 and Q1 2025 [3].