Core Insights - The report highlights that China National Airlines is the only flag carrier in China and has entered the top tier of global air transport companies, with a comprehensive international route network and a balanced domestic and international presence [1][5][6] - The growth rate of China's civil aviation fleet is showing a "step-down" trend, influenced by global supply chain disruptions, leading to a decline in major aircraft manufacturers' order fulfillment capabilities [1][8] - The continuous recovery of the tourism market is expected to boost air travel demand, with the average price of aviation kerosene decreasing compared to the same period last year, enhancing the company's profitability [1][8] Company Overview - China National Airlines was established in October 2002 through the merger of China International Airlines, China Aviation Corporation, and China Southwest Airlines, and it went public in Hong Kong and London in December 2004, followed by a listing on the Shanghai Stock Exchange in August 2006 [6] - The company's main business is air passenger services, which typically accounts for nearly 90% of total revenue, projected to be 91% in 2024 [6] - Revenue for 2024 is expected to reach CNY 166.699 billion, representing an 18.14% year-on-year growth, with a gross profit margin of 5.11% [6] Industry Performance - Over the past 15 years, the air passenger transport volume has increased by 172.8%, with domestic passenger transport volume expected to reach 730 million in 2024, a year-on-year increase of 17.86%, marking a historical high [7][8] - The cargo and mail transport volume is projected to reach 8.983 million tons in 2024, reflecting a year-on-year growth of 22.15% [7] - The commercial aviation market in China is dominated by three major airlines: China National Airlines, China Eastern Airlines, and China Southern Airlines, which together accounted for 62.64% of total transport turnover in 2024 [7] Key Factors Influencing Performance - Aircraft supply is constrained due to the "step-down" growth trend of China's civil aviation fleet and disruptions in global supply chains affecting aircraft manufacturers' order fulfillment [8] - Travel demand is expected to rise as per capita flight frequency in China has room for improvement compared to developed countries, alongside a steady increase in GDP and a recovering tourism market [8] - Oil prices and exchange rates are critical factors affecting airline profitability, with the average price of aviation kerosene at USD 86.01 per barrel in the first ten months of 2025, down 10.90% year-on-year [8] Financial Projections - Revenue projections for China National Airlines from 2025 to 2027 are CNY 174.715 billion, CNY 188.020 billion, and CNY 205.245 billion, with year-on-year growth rates of 4.8%, 7.6%, and 9.2% respectively [9] - The expected net profit attributable to shareholders for the same period is CNY 1.561 billion, CNY 6.503 billion, and CNY 10.265 billion, with earnings per share (EPS) of CNY 0.09, CNY 0.37, and CNY 0.59 [9]

Core Insights - The report highlights the growth potential of China Eastern Airlines, one of the three major state-owned airlines in China, which has a leading wide-body fleet and operates from key hubs in Beijing and Shanghai [3][6][7] - The aviation market in China is experiencing a recovery, with a significant increase in passenger transport volume and a trend towards market-driven pricing for airfares [8][9] Company Overview - China Eastern Airlines was established on June 25, 1988, and became the first Chinese airline to be listed in Hong Kong, New York, and Shanghai in 1997. The airline's passenger transport services account for over 90% of its total revenue, projected to be 92% in 2024 [7] - The company's revenue for 2024 is expected to reach CNY 132.12 billion, representing a year-on-year growth of 16.11%, with a gross profit margin of 4.26%. For the first half of 2025, revenue is projected at CNY 66.82 billion, a 4.09% increase year-on-year [7] Industry Performance - The aviation industry in China has seen a 172.8% increase in passenger transport volume over the past 15 years, with domestic passenger transport volume expected to reach 730 million in 2024, a 17.86% increase year-on-year [8][9] - The cargo and mail transport volume is projected to be 8.983 million tons in 2024, reflecting a year-on-year growth of 22.15% [8] Key Factors Influencing Growth - Aircraft supply is experiencing a downward trend in growth due to global supply chain disruptions affecting major aircraft manufacturers' delivery capabilities [9] - Domestic travel demand is expected to rise, supported by increasing per capita flight frequency and GDP growth, alongside a recovering tourism market [9] - The average price of aviation kerosene for the first nine months of 2025 is reported at USD 85.85 per barrel, down 11.93% from the previous year, which is beneficial for reducing operational costs and enhancing profitability [9]

Investment Rating - The report initiates coverage with a rating of "Buy" for China Eastern Airlines [1][6]. Core Insights - China Eastern Airlines is one of the three major state-owned airlines in China, benefiting from dual core hubs in Beijing and Shanghai. The company is positioned to capitalize on the recovering tourism market, which is expected to drive air travel demand. The report highlights a trend of decreasing growth in the civil aviation fleet size in China, influenced by global supply chain disruptions affecting aircraft manufacturers [1][4][9]. - The average price of aviation kerosene has decreased compared to the previous year, which is anticipated to enhance the company's profitability [4][9]. - The projected revenue for China Eastern Airlines from 2025 to 2027 is estimated at RMB 143.18 billion, RMB 152.11 billion, and RMB 159.50 billion, respectively, with year-on-year growth rates of 8.4%, 6.2%, and 4.9% [6][8]. Summary by Sections Company Overview - China Eastern Airlines, established on June 25, 1988, is a leading state-owned airline in China, with a significant presence in the aviation market. The company operates a modern fleet of 816 aircraft, making it one of the youngest fleets globally [17][23]. - The airline's main business is passenger and cargo transportation, with passenger services accounting for over 90% of total revenue in normal circumstances [24][9]. Financial Performance - In 2024, the total revenue reached RMB 132.12 billion, marking a 16.11% increase year-on-year, and the highest revenue in nearly a decade. The company has shown a recovery trend post-COVID-19, with significant revenue growth in 2023 and 2024 [38][45]. - The net profit attributable to shareholders is projected to be RMB 1.405 billion, RMB 4.528 billion, and RMB 7.055 billion for 2025, 2026, and 2027, respectively [6][8]. Market Dynamics - The Chinese aviation market has seen a 172.8% increase in passenger transport volume over the past 15 years, with a growing trend towards market-based pricing for airfares [53][54]. - The three major airlines (Air China, China Eastern Airlines, and China Southern Airlines) accounted for 62.64% of the total transport turnover in 2024, indicating a consolidated market structure [55][56]. Operational Metrics - In 2024, the available seat kilometers (ASK) were 296.91 billion, reflecting a 21.20% year-on-year increase, while revenue passenger kilometers (RPK) reached 245.89 billion, up 34.89% year-on-year, resulting in a passenger load factor of 82.76% [28][36]. - The cargo segment has shown fluctuations, with available cargo ton kilometers at 9.51 billion and cargo turnover at 3.68 billion in 2024, indicating a recovery in cargo operations [36][40].

Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [1][5]. Core Views - China Southern Airlines has the largest fleet size in the country and leads in passenger capacity among domestic airlines. The growth rate of China's civil aviation fleet is showing a "step-down" trend, while the ongoing recovery in the tourism market is expected to boost air travel demand. The average price of aviation kerosene has decreased compared to the same period last year, which is beneficial for enhancing the company's profitability [1][5][8]. Company Overview - China Southern Airlines is the leading air transport service provider in China, with a well-established fleet and a focus on building dual hubs in Guangzhou and Beijing. The company has maintained the highest passenger transport volume among domestic airlines for 44 consecutive years. The airline operates a diverse fleet, including Boeing and Airbus models, and has a significant market share in terms of flight frequency and route network [16][24][25]. Financial Data - The company's total revenue for 2024 reached approximately 174.22 billion RMB, marking a 8.94% year-on-year increase, and is the highest in nearly a decade. The company has experienced continuous losses for four years since the pandemic, but the financial performance is showing signs of recovery, with a significant increase in revenue in 2023 [39][41][43]. Industry Overview - The aviation industry in China has seen a 172.8% growth in passenger transport over the past 15 years, with a gradual marketization of air ticket pricing. The three major airlines (Air China, China Eastern Airlines, and China Southern Airlines) account for over 62.64% of the total transport turnover in the market. The domestic passenger transport volume is expected to reach 730 million in 2024, a year-on-year increase of 17.86% [47][48][49].