Investment Rating - The investment rating for the company is "Buy" [3] Core Insights - In Q2 2025, the company's net profit attributable to shareholders increased by 81.5% year-on-year, with a total revenue of 3.73 billion yuan, up 7.7% year-on-year [1][2] - The company is undergoing a significant expansion project, with a total investment exceeding 50 billion yuan, expected to be completed by 2025, which will increase annual passenger throughput capacity to 120 million [2] - The company is expected to see a recovery in both aviation and non-aviation revenues as passenger traffic continues to recover [2] Financial Summary - For H1 2025, the company achieved a net profit of 750 million yuan, a year-on-year increase of 71.3%, with a forecasted net profit of 1.37 billion yuan for 2025 [3][8] - The projected revenue for 2025 is 7.98 billion yuan, reflecting a 7% increase from 2024 [3] - The company's earnings per share (EPS) is expected to be 0.58 yuan in 2025, with a price-to-earnings (P/E) ratio of 17.03 [3][8]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 11.50, up from the previous target of HKD 11.00 [6][5][17] Core Views - The company reported a revenue of RMB 1.079 billion for 1H25, a decrease of 6.1% year-on-year, with a net loss attributable to shareholders of RMB 70 million, which is a 71.7% improvement compared to the previous year [1][3] - The weak performance in passenger traffic, which decreased by 4.1% to 13.91 million passengers, is attributed to changes in popular travel destinations and competition from other airports and transport modes [2][4] - The company is expected to benefit from the upcoming Hainan Free Trade Port policies, which are anticipated to stimulate passenger flow and enhance the operational efficiency of the airport [4][5] Financial Performance Summary - The company's operating costs for 1H25 were RMB 1.046 billion, an increase of 5.5% year-on-year, leading to a gross profit decline to RMB 33 million [3] - The report projects a downward revision of the company's net profit for 2025 to a loss of RMB 76 million, with subsequent years showing a recovery to profits of RMB 271 million in 2026 and RMB 499 million in 2027 [5][10] - The earnings per share (EPS) are forecasted to be -0.16 for 2025, 0.57 for 2026, and 1.05 for 2027 [10][5] Market Position and Future Outlook - The establishment of a joint venture with Changi Airport Group is expected to enhance the company's ability to monetize non-aeronautical revenues [1][4] - The anticipated completion of the acquisition of control over Hainan Airport is expected to improve the utilization of aviation resources on Hainan Island, reinforcing the company's hub status [4][5] - The report highlights the potential for long-term profitability improvements driven by the Free Trade Port's benefits and the company's capacity expansion [5][4]