China Eastern Airlines (600115) in-depth research report: Pioneer of mixed reforms is forging ahead and making a thin start

China Eastern Airlines (600115) in-depth research report: Pioneer of mixed reforms is forging ahead and making a thin start

Accumulated wealth: Sitting on a super hub, the first 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.

55 yuan.

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.

2%, 8.

2%, 6.

2%, 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% across the Shanghai market. They will jointly expand and strengthen the Shanghai market in the future.

4) Gold Beijing-Shanghai line: the icing on the cake in the high season, the snow in the off-season, the long-term price is 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 淡水桑拿网 yuan.

Undervalued China United Airlines: Standards are not equal to low-yield conventional low-cost airlines.

For 15 years, China Eastern Airlines has promoted the transitional regulations of its wholly-owned subsidiary, China United Airlines.

In the four years of transition, revenue increased by 43% and net profit increased by 235% (net profit in 2018 was 8.

800 million, annual growth), passenger-kilometer revenue level increased by 9%, currently 49 aircraft.

China United Airlines received 0 passengers in 2018.

553 yuan is 0 with China Eastern Airlines.

56 yuan is almost the same.

We found that China United Airlines is actually an important gene for the success of the overseas calibration model: that is, the exclusive operation of the two terrain bases of Nanyuan and Foshan Shadi, which can meet the demand overflow of the capital and Baiyun.

According to statistics, 55% of China United’s solo routes, such as Beijing Nanyuan-Xiamen, Foshan-Shijiazhuang, etc.

Looking forward to the future, China United Airlines is expected to make a one-time transfer to Daxing Airport in October 19th. It is expected that it will be able to connect higher-quality routes and turnover to further develop itself.

At the time of the voyage: Under the influence of the Boeing incident, the supply and demand elasticity of the three major airlines relatively benefited industries.

Pilots We analyze that Boeing MAX will affect the growth rate of domestic conventional capacity or about 4%, and China Eastern’s inventory volume accounts for 2%.

2%, lower than 4% of China Southern Airlines and 3 of Air China.

3%.It is planned to introduce 11 aircraft in 19, which is equivalent to the fleet size 1.

6%, which is also lower than Air China and China Southern Airlines (45 aircraft).

Therefore, the relative relative benefits of strong supply and demand elasticity.

From the perspective of historical elasticity, the elasticity of income is twice the level of the gap between supply and demand.

Considering only 3% elasticity, China Eastern Airlines increased its thickness by about 600 million (18%) in Q3 peak season.

In the past ten years, it has increased by 1.5 billion yuan, equivalent to 57% of the profit in 18 years.

Earnings forecast and forecast: raise earnings forecast, target price is 10-12 yuan, expect 35-62% of earlier spot price space, “strong push” rating.

Considering the halving of the Civil Aviation Development Fund (reducing costs by half to 600 million for the half-year in 2019 and increasing profits by about 4-5 billion), and based on the current Boeing incident progress, conservatively raise the passenger load factor level of China Eastern Airlines to 0.

Nine goals (the budget is expected to be the same as 2018), and the profit forecast is raised to a profit of 97,119 and 14.6 billion in 2019-21 (the original forecast was US $ 85,103 and 12.9 billion), corresponding to PE of 2019-21 is 11.

1, 9 and 7.

4 times.

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, 35-62% of the space is expected to be earlier, it is recommended to “strongly push” the level.

Note: A 1% increase in load factor / fare will bring the company about 900 million profits, so with the interpretation of the Boeing event, there may be a performance that continues to exceed expectations.

Risk warning: economic growth, oil price growth, and industry supply not brought about by the Boeing incident.