Investment Rating - The investment rating for the company is "Buy" and it is maintained [7] Core Views - In the first half of 2025, the company achieved a net profit attributable to shareholders of 5.1 billion yuan, representing a year-on-year increase of 3% [1] - The company's operating revenue for the first half of 2025 was 110.7 billion yuan, a year-on-year increase of 1% [1] - The report highlights the improvement in aircraft utilization rates as a key area of focus [1] Financial Performance Summary - In Q2 2025, the company reported operating revenue of 53.4 billion yuan, a year-on-year increase of 2%, and a net profit of 1.6 billion yuan, a year-on-year increase of 40% [1] - The company's available aircraft utilization rate was 11.66 hours per day, an increase of 0.2 hours year-on-year, while the registered aircraft utilization rate decreased by 0.6 hours to 9.84 hours per day [2] - The gross profit margin was under pressure due to declining utilization rates, but profits were supported by route subsidies and aircraft operation compensation [3] Revenue and Cost Analysis - In the first half of 2025, the unit revenue per available seat kilometer (ASK) was approximately 0.387 yuan, a decrease of 3% year-on-year, while the unit revenue per revenue passenger kilometer (RPK) was 0.454 yuan, down 4% year-on-year [2] - The unit operating cost for the first half of 2025 was 0.341 yuan, an increase of 1% year-on-year, with fuel costs decreasing by 11% and non-fuel costs increasing by 15% [3] - Other income for the first half of 2025 was approximately 5.8 billion yuan, a year-on-year increase of 68%, primarily due to route subsidies [3] Industry Outlook - The supply-demand relationship in the aviation industry is expected to continue improving, with a long-term tightening of supply due to delays in aircraft and engine deliveries [4] - The report anticipates steady growth in aviation demand, enhancing the elasticity of ticket prices [4] Investment Projections - The projected net profits for the company from 2025 to 2027 are 11.83 billion yuan, 17.61 billion yuan, and 23.12 billion yuan, respectively, with corresponding price-to-earnings (PE) ratios of 23.42, 15.74, and 11.99 [5]