Investment Rating - The report maintains a "Recommended" rating for the company [4][6] Core Views - The company reported a revenue of 863 billion yuan for H1 2025, a year-on-year increase of 1.8%, with a net loss attributable to shareholders of 15.3 billion yuan [1] - The reduction in investment losses from Sichuan Airlines and the decline in oil prices contributed to the improvement in financial performance [3] - The company is optimistic about the profit potential of its all-cargo aircraft and the recovery of ticket prices in the industry [4] Financial Performance Summary - For Q2 2025, the company achieved a revenue of 429 billion yuan, a year-on-year increase of 6.7%, with a net loss of 7.9 billion yuan [1] - The overall passenger revenue decline narrowed to 4.9% in Q2 2025, with domestic and international passenger kilometer revenue declines of -3.9% and -8.0%, respectively [2] - The logistics subsidiary, China Southern Airlines Logistics, generated a revenue of 94.0 billion yuan in H1 2025, a year-on-year increase of 1.9% [2] Cost and Profitability Analysis - In Q2 2025, the unit cost decreased by 5.4% year-on-year, while the unit fuel cost decreased by 22% [3] - The company recorded a pre-tax profit of 6.0 billion yuan in H1 2025, up from 1.6 billion yuan in H1 2024, despite a significant increase in income tax expenses [3] - The report forecasts a net profit attributable to shareholders of 18.4 billion yuan for 2025, with projections of 42.4 billion yuan and 76.7 billion yuan for 2026 and 2027, respectively [4][5]