China Eastern Airlines (600115): Continued downward estimation of unit non-oil cost is attractive
In the third quarter of 2019, the profit of foreign exchange deduction was basically in line with our expectations. China Eastern Airlines announced the first three quarters of 2019 results: operating income of 93.4 billion US dollars, an increase of 6.
3%; Net profit attributable to parent company 43.
7 ‰, the ten-year average of 2.
7%, corresponding to a relative profit of 0.
Third-quarter operating income was 346.
2 ‰, an increase of 3 per year.
5%, net profit attributable to mother 24.
2 ‰, an increase of 9 per year.
8%, we estimate that after the impact of foreign exchange cash, the third quarter net profit of about US $ 3.4 billion, an increase of 5%, basically in line with our expectations.
The company’s revenue growth rate in the third quarter was significantly slower than that of passenger turnover.
In the third quarter, the company’s passenger turnover increased by 10% annually, passenger traffic increased by 7% every six months, and operating revenue increased by 3% annually.
5%, which is significantly slower than the growth rate of passenger turnover. We estimate that due to the impact of macroeconomic growth, the company’s passenger-kilometer revenue decreased.
Excluding the effect of halving the collection of the Civil Aviation Development Fund, we expect the unit non-oil cost reduction in the third quarter to fall by 4-5%.
Beginning in the second half of the year, the civil 杭州桑拿网 aviation development fund paid for flights will be halved. After excluding this part of the impact, we will gradually reduce the company ‘s unit non-oil cost by 4 to 5% in the third quarter.
Development Trends In the future Beijing, Shanghai two-wheel drive, currently expected attractiveness.
The company successfully completed the non-public issuance of A and H shares in the third quarter. China Eastern Airlines also completed the subscription for Auspicious Increase. The two major aviation groups have deepened cooperation to jointly maintain the vortex of the Shanghai aviation market; Daxing Airport has been on September 25Put into operation, while retaining the Beijing-Shanghai line at the Capital Airport, the company has also become one of the main base airlines of Beijing Daxing Airport, and can share the momentary increase of the Beijing market and open the era of dual bases in the north.
China Eastern Airlines A shares currently correspond to 1.
2 times 2020 P / B, H shares correspond to 0.
7 times P / B in 2020, estimated to be near the standard deviation of double the historical mean, is attractive.
Earnings forecasts and estimates remain unchanged from 2019/2020 earnings forecasts66.
72 ppm / 84.
The current A-share contradiction corresponds to 2019/2020 1.
4 times / 1.
2 times price-to-book ratio.
The current H share corresponds to 0 in 2019/2020.
8 times / 0.
7 times P / B ratio.
The stock maintains an Outperform rating and 7.
The target price of 00 yuan corresponds to 1.
8 times 2019 P / B ratio and 1.
6 times 2020 P / B ratio, 34 as compared with the recent inclusion.
H shares maintain an outperform rating and 5.
50 target price, corresponding to 1.
3x 2019 P / B ratio and 1.
1x 2020 P / B ratio, 40 more recently included.3% upside.
Risks Aviation demand fell short of expectations; RMB depreciated sharply against the US dollar; oil prices rose sharply.