China Eastern Airlines (600115) 2019 First Quarterly Report Review: Deductions in Profits and Long-term Growth Nearly 40% Highlight “Strong Push” Ratings
Company announcement for the first quarter of 2019: performance growth increased by 1.
2%, the maximum profit of foreign exchange deductions increased by nearly 40%.
1) Financial data: The report gradually realized 301 trillion operating income, with an annual increase of 12.
3%; net profit attributable to mother 20.
1 ppm, an increase of 1 in ten years.
The deduction of foreign exchange profits gradually increased by nearly 40%.
18Q1 exchange rate appreciation 3.
8%, 19Q1 appreciation 1.
9%, the exchange rate sensitivity is magnified due to the consolidation of operating leases (expected to be 1.
5 times or so), we estimate that in 19Q1, the exchange rate of 10 will be realized.
500 million, 14 in 18Q1.
600 million, a decrease of 4 every year.
10,000 yuan, so the maximum profit deduction 18.
20,000 yuan, an increase of nearly 40% in ten years.
2) Due to the income tax rate reported by the company24.
5%, which is higher than 22% in 18Q1.
8 ppm, a six-year increase of 6.
3) Impact of the attached new accounting standards: The implementation of the new accounting standards from January 2019 will affect the company’s statements: the total assets will increase by 35.7 billion, the liabilities will increase by 37.5 billion, and the owner’s equity will decrease by 18.
400 million, Q1 asset-liability ratio rose by about 3.
8 up to 78.
The level of income increased, and the cost of deducting fuel per unit kilometer was basically flat.
1) The company’s Q1 kilometers revenue increased by 1夜来香体验网%.
The company’s ASK grew ten years in the first quarter.
89%, RPK increased by 12 in half a year.
02%, with a load factor of 82.
6%, increasing by 0 every year.
There are 83 single items. We estimate that the company’s passenger-kilometer revenue will increase by 0.
28%, seat kilometers increase 1% in ten years.
2) Cost: The company’s operating costs increase by 9 per year.
6% to 258 ppm, an increase more than ASK launch.
Of which, the cost of fuel oil: the average price of domestic comprehensive mining costs in the first quarter was 4,756 yuan / ton, which gradually decreased by 3%.
8%, estimated the company’s fuel cost 79.
6 trillion, an increase of 7 in ten years.
The cost of deducting oil per unit kilometer is flat and slightly reduced by 0 every year.
The Beijing-Shanghai line staying 杭州夜网论坛 at the Capital Airport will lift the company’s mid-term suppression.
1) After the relocation of the Beijing-Shanghai line of the Air Force market competition company to Daxing Airport in the future or its impact on business sources, the Beijing-Shanghai line will remain at the Capital Airport according to the adjustment plan, and temporary replacement can be lifted.
2) Our Air Force in-depth reporting system analyzes the golden Beijing-Shanghai line: icing on the cake in high season, sending charcoal in the off-season, and long-term prices are still underestimated.
Under the marketization of prices, the full-price economy class ticket for the Beijing-Shanghai line was raised from 1,240 yuan to 1,490 yuan in the past, but it is still a price depression in the Yangtze River Delta-Beijing (2420 yuan for Beijing-Hangzhou full price ticket).
Eastern Airlines accounts for more than 50% of the Beijing-Shanghai line. If the price of Beijing-Hangzhou is referenced, assuming a discount as low as 70%, the profit will increase by about 1.7 billion, which is equivalent to more than 30% of the 18-year foreign exchange deduction profit.
Note: The price increase is 10%, regardless of discount changes, and the profit is increased by about 400 million yuan.
The company sits on a super hub, and has the opportunity to build a super carrier.
1) Shanghai market: unique locations create super hubs, increasing the value of routes at scarce times.
At the level of income, we estimate that the market in Beijing, Shanghai, Guangzhou and Shenzhen is clearly ahead of the national average (0.
42 yuan), of which Shanghai Hongqiao to 0.
64 yuan ranked first, Beijing 0.
59 ranked second, about 0 in Pudong.
2) Increasing the company’s core hub share has increased the effect of marketization of passenger transportation prices.
Four domestic bases: two in Shanghai and two in Beijing. Kunming and Xi’an’s market share in 2018 were 41%, 18%, 37% and 29%, which can be expanded and improved in addition to Xi’an.
Revenue from seat kilometers on domestic routes increased by 4.
9%, Pudong, Hongqiao, the capital, and Kunming increased by 4.
8%, especially Hongqiao increased by 4 in the first half of the year.
3%, the initial increase reached 8.
2%, Beijing consists of 2.
8% increased to 6.
3) Future opportunities: Cross-shareholding with Auspicious (Junyao Group). The two parties together have a market share of more than 50% in the Shanghai market. It is expected that the Shanghai market will be bigger and stronger together.
Earnings forecasts and estimates: We maintain earnings forecasts for 2019-21 of 97, 119 and 146 trillion, corresponding to 10, 8 and 7 times the PE of 2019-21, respectively.
With reference to the historical performance of the resurrected aviation stocks, it will give 15-18 times PE in 2019 with a target range of 10-12 yuan, corresponding to 2.
1 PB, “Strong Push” rating is recommended.
Note: A 1% increase in passenger load factor / fare is expected to bring about 900 million profits to the company, so with the interpretation of the Boeing incident, there may be a performance that continues to exceed expectations.
Risk reminder: oil price increases sharply, exchange rate appreciates significantly, Boeing incident has not brought substantial supply impact