Core Viewpoint - China National Airlines significantly reduced its net loss in the first half of the year, achieving profitability in Q2 2025, with a net profit of 240 million yuan compared to a net loss of 1.11 billion yuan in the same period last year [1] Financial Performance - In the first half of the year, the company reported a net loss attributable to shareholders of 1.81 billion yuan, a year-on-year reduction in loss of 980 million yuan [1] - Q2 2025 saw a net profit of 240 million yuan, marking a turnaround from a net loss of 1.11 billion yuan in the same quarter of the previous year [1] Future Outlook - The company is expected to benefit from the recovery of international flights, declining oil prices, industry supply-demand rebalancing, and improvements in operational efficiency, leading to stabilized revenue levels and gradual recovery in profitability [1] - However, short-term challenges include weak demand for business travel and pressure on peak season ticket prices, prompting a downward revision of the company's net profit forecasts for 2025-2027 to 1.53 billion, 3.47 billion, and 3.89 billion yuan respectively [1] Strategic Positioning - The company has a strong strategic position with its hub at Beijing Capital Airport, covering economically developed and densely populated regions of China, which is expected to continue benefiting from business travel and the recovery of international long-haul routes [1] - The company maintains a "buy" rating, reflecting confidence in its long-term advantages and market positioning [1]

Investment Rating - The report maintains an "Accumulate" rating for the company [2][7]. Core Views - The company achieved a revenue of 80.76 billion yuan in the first half of 2025, a year-on-year increase of 1.6%, with a net loss of 1.81 billion yuan, which is a reduction in loss by 0.98 billion yuan compared to the previous year [6]. - In Q2 2025, the company turned profitable with a net profit of 240 million yuan, compared to a net loss of 1.11 billion yuan in the same period last year [6]. - The international flight capacity is steadily recovering, while domestic flight capacity has slightly decreased, supporting an increase in passenger load factor [6]. - The company expects to benefit from the recovery of international flights, declining oil prices, and improved operational efficiency, leading to a stabilization of revenue levels and gradual recovery of profitability [7]. Financial Performance - In H1 2025, the company reported a passenger revenue of 73.2 billion yuan, a slight increase of 0.08% year-on-year, while cargo and mail revenue rose by 7.5% to 3.58 billion yuan [6]. - The unit cost per seat kilometer decreased by 2.2% year-on-year, with fuel costs per seat kilometer down by 13.3% [6]. - The company achieved a gross profit of 2.41 billion yuan in H1 2025, representing a year-on-year increase of 17.4% [6]. Operational Metrics - In H1 2025, the company's available seat kilometers (ASK) and revenue passenger kilometers (RPK) increased by 3.4% and 5.2% year-on-year, respectively, with a passenger load factor of 80.7%, up by 1.4 percentage points [6]. - The international ASK and RPK grew by 16.7% and 17% year-on-year, with a load factor of 76.5% [6]. Future Outlook - The company is positioned to benefit from its strategic hub at Beijing Capital Airport, which covers economically developed and densely populated areas, and is expected to continue to gain from business travel and international long-haul routes [7]. - The report projects a decline in net profit for 2025-2027, estimating 1.53 billion yuan, 3.47 billion yuan, and 3.89 billion yuan, respectively [7].