Air China (601111): Stable growth against the market
Capacity optimization + price increase, Q4 off-season results exceeded expectations.
The company’s operating income in the fourth quarter was 3.39 million yuan, with a growth rate of 19 in ten years.
Capacity optimization: Starting from October 2018, the company replaced most of the Tokyo-related routes with wide-body aircraft, which partially enhanced capacity.
In November, the company reduced some long-haul routes with poor benefits and high costs, and optimized the route structure.
Price increase: In accordance with the Civil Aviation Administration’s policy, the company raised the freight rate of key airlines: the company’s unit RPK operating income in the fourth quarter was zero.
61 yuan / passenger kilometer, an annual increase of 12% in passenger transport: RPK and ASK increase, and fare increases drive passenger revenue improvement.
18 years, the company ASK +10 in advance.
4%; RPK + 9.
7%; passenger kilometers yield 0.
55 yuan (+2.
9%); load factor 80.
Freight: Profits increased slightly.
For 18 years, the company ATK +6 per second.
9%; RTK +5 per second.
7 points); ton-kilometer income 1.
43 yuan (+5.
4%), of which domestic 1.
19 yuan (+1.
3%) The double impact of the oil price exchange rate, performance improvement was masked.
In 18 years, the average purchase price of Brent crude oil and Air China crude oil increased on average, and the cost of aviation fuel was 38.5 billion (+35).
5%); RMB depreciation leads to exchange losses23.
However, if the external oil exchange disturbance is excluded, the company’s cost side and profit side will improve significantly: the operating cost of the company’s unit ASK oil deduction in 2018 was 0.
28 yuan (-3.
3%); the company’s 18-year deduction of foreign exchange profits totaled 123.
4 ppm, a ten-year increase of 44.
4%, showing the gradual profit potential under the fare reform.
Capacity has been steadily introduced to improve the layout of the quadrangular rhombus.
At the end of 18, the company ‘s fleet size reached 684 (664 passenger aircraft + 15 cargo aircraft + 5 business jets). The company plans to increase its net fleet by 55/46/5 on 19/20/21 and increase its passenger fleet by 8.
3% / 6.
4% / 0.
The company takes Beijing Capital International Airport as the main base. In the future, SkyTeam will relocate to Beijing’s new airport for operation to strengthen the 杭州桑拿 advantages of Air China’s main hub. At the same time, it will continuously improve the quadrangular rhombus network structure with Beijing, Chengdu, Shanghai and Shenzhen as a whole. Investment suggestion: Aviation belongs to the reconstruction industry. It is the result of the overlapping of supply and demand, oil prices and exchange rates. The overlapping of B737MAX suspension of Shihang certification will lead to short-term capacity replacement and replacement. Expense reform will usher in the third flight season.Come and turn up.
We predict that the EPS of Air China in 19/20 will be 0.
06 yuan, corresponding to the current expected PE is 12.
The marginal risks have begun to clear, the industry’s prosperity is expected to rebound, Air China’s hub network, cost control performance may exceed 重庆耍耍网 expectations, and it is given a “strong recommendation-A” rating with a target price.