Summary of Baiyun Airport Conference Call Company Overview - Baiyun Airport reported a total profit of approximately 1.347 billion yuan for the first three quarters of 2025, showing strong profitability despite a quarter-on-quarter decline in Q3 [2][3] - As of the end of October 2025, Baiyun Airport had handled 450,000 flights, a year-on-year increase of 7.6%, and passenger throughput reached 68.74 million, up 8.8% year-on-year [2][4] Key Financial Metrics - Revenue showed a quarterly upward trend: Q1 revenue exceeded 1.82 billion yuan, Q2 reached 1.905 billion yuan, and Q3 further increased to 1.97 billion yuan [3] - Net profit for Q3 was approximately 450 million yuan, with a notable non-recurring gain of over 100 million yuan in Q2 [3] Revenue Breakdown - For the first three quarters of 2025, aviation revenue was approximately 2.37-2.38 billion yuan, while non-aviation revenue was around 3.3 billion yuan [2][13] - Non-aviation revenue included duty-free income of 360 million yuan, ground service income of 830 million yuan, and VIP lounge and flight delay service income of 330 million yuan [2][14] Duty-Free Business Insights - Duty-free business showed limited growth, with average sales per passenger still lagging behind 2019 levels [15][16] - The newly established indoor duty-free store contributed minimally to overall revenue, as the company holds only a 10% stake [17] Infrastructure Developments - The T3 terminal was put into operation on October 30, 2025, enhancing the airport's capacity with a peak hour capacity approved to increase to 93 flights [2][6][9] - The airport aims for an annual passenger throughput target of 120 million by 2030 [6] Cost and Expense Management - Management expenses increased in Q3 due to rising labor costs and slight increases in office rental fees [7] - The company is currently negotiating the asset usage model post the third runway's operation, with a cautious financial accounting approach [8] Future Outlook and Challenges - The recovery of international passenger volume remains uncertain, with geopolitical factors impacting routes to India and Europe [12] - The company anticipates challenges in fully recovering to 2019 levels by year-end, with a gap of 3-4 million passengers compared to 2019 figures [12] Advertising and Non-Aviation Business - The advertising business is significantly affected by the economic environment, with plans to invite stronger operators through bidding processes [5][21] - The T2 airport's duty-free agreement will expire in 2026, with renewal or re-bidding pending government approval [20] Shareholder Returns - The company has updated its dividend policy to ensure a payout ratio of no less than 50% from 2024 to 2026, reflecting a commitment to shareholder returns [5][26] Conclusion - Baiyun Airport's performance in 2025 shows resilience with a focus on cost control and revenue generation strategies, despite external challenges impacting recovery and growth potential [27]

Group 1 - The company achieved a revenue of 2.755 billion yuan in the first half of 2025, representing a year-on-year growth of 2.6%, with aviation revenue at 1.345 billion yuan, up 4.6%, and non-aviation revenue at 1.410 billion yuan, up 0.8% [1] - The company's net loss after tax was 164 million yuan, a significant reduction from a loss of 376 million yuan in the same period last year [1] - Passenger throughput reached 34.17 million, a year-on-year increase of 4.5%, with international passenger throughput growing by 21.3%, increasing its share from 17.4% to 20.2% [1] Group 2 - Non-aviation revenue was 1.410 billion yuan, with a slight year-on-year increase of 0.8%, while franchise income decreased by 4.5% to 749 million yuan [2] - Advertising revenue fell by 3.5% to 343 million yuan due to the impact of new media, while retail (duty-free) revenue grew by 1.2% to 262 million yuan, which was below the growth rate of international passenger volume [2] - Operating costs totaled 2.779 billion yuan, a decrease of 4.2% year-on-year, with franchise management fees down by 24.9% to 138 million yuan [2] Group 3 - The company maintains a strong position as an international aviation hub, with long-term commercial value expected to gradually release profitability [3] - Short-term challenges include the diversion of traffic to Daxing Airport and a slowdown in duty-free consumption growth, leading to a slower-than-expected recovery in non-aviation revenue [3] - Net profit forecasts for 2025-2027 have been adjusted to -173 million, 88 million, and 342 million yuan respectively, while maintaining a "recommended" rating [3]

Investment Rating - The report maintains a "Recommend" rating for the company, indicating an expected outperformance of 10%-20% relative to the benchmark index over the next six months [6][21]. Core Insights - The company reported a Q2 net profit attributable to shareholders of 450 million yuan, representing an 81.5% year-on-year increase, driven by the continuous recovery in business volume and arbitration compensation [1][6]. - The target price for the company's stock is set at 12.07 yuan, with the current price at 9.93 yuan, suggesting a potential upside of 22% [2][6]. Financial Performance Summary - **Revenue and Profitability**: - Total revenue for H1 2025 was 3.726 billion yuan, up 7.7% year-on-year, while net profit attributable to shareholders was 750 million yuan, up 71.3% year-on-year [6][7]. - For Q2 2025, revenue was 1.905 billion yuan, a 6.0% increase year-on-year, and net profit was 450 million yuan, an 81.5% increase year-on-year [6][7]. - **Segment Analysis**: - Aviation revenue for H1 2025 was 1.57 billion yuan, up 9.4% year-on-year, with passenger throughput reaching 40.03 million, a 9.2% increase year-on-year [6][7]. - Non-aviation revenue was 2.15 billion yuan, up 6.5% year-on-year, with leasing and franchise income contributing significantly [6][7]. - **Cost and Expenses**: - Operating costs for H1 2025 were 2.651 billion yuan, a 5.8% increase year-on-year, while total operating expenses were 256 million yuan, down 7.3% year-on-year [6][7]. Future Projections - The company is expected to achieve total revenue of 8.182 billion yuan in 2025, with a year-on-year growth rate of 10.2% [2][11]. - The net profit attributable to shareholders is projected to be 1.402 billion yuan in 2025, reflecting a 51.5% increase year-on-year [2][11]. Market Position and Developments - The company is expanding its operations with the upcoming completion of the T3 terminal and additional runways, which will enhance its capacity to handle 140 million passengers and over 600,000 tons of cargo annually [6][7]. - A significant contract for duty-free operations at the T3 terminal has been signed, expected to contribute positively to future revenues [6][7].