Review of performance in May: the sector's growth was lower than the overall market. The transportation sector rose 2.92% this month, better than the Shanghai Stock Exchange Index and CSI 300. The aviation and airport sectors fell 0.01% and 4.9% respectively, showing weak performance in the transportation sector. Hua Xia Airlines (8.4%) and China Southern Airlines (3.7%) led the gains, while CITIC Haizhi (- 19.3%) and Shanghai Airport (- 7.7%) saw a large decline.
Review of basic conditions: 1) The inbound and outbound travel market in May is rising in popularity, and the subsequent market is expected to continue to recover: the big data of Air Travel Horizon shows that from May 1 to 14, the number of inbound and outbound civil aviation passengers of domestic airlines exceeded 2.24 million, the number of inbound civil aviation passengers of domestic airlines increased about 1.2 times, and the number of outbound civil aviation passengers of domestic airlines increased about 1.4 times.
According to Ctrip's data, the number of visa applicants in the second quarter doubled compared with 2023, and increased by 20% compared with 2019. After the May Day holiday, the number of summer visa applicants doubled compared with the number before the May Day holiday. It is expected that as the summer holiday season approaches, the inbound and outbound tourism market will continue to recover. 2) Low altitude economic policies continued to develop in May: In May, low altitude economic policies continued to develop. Beijing, Guangzhou, Hainan and other places further relaxed the restrictions on low altitude economy, and introduced various incentive policies around emergency rescue, logistics distribution, air ferry, intercity commuting, characteristic cultural tourism and other application scenarios to promote and expand the low altitude economic industry chain. Taking the Implementation Plan for the Development of Guangzhou's Low altitude Economy as an example, by 2027, the overall scale of Guangzhou's low altitude economy will reach about 150 billion yuan. 3) The draft of Shanghai Airport A-share restricted stock incentive plan was released: this incentive plan will effectively bind the interests of the management, but the set performance target for lifting the ban is lower than the level in 2019, which we believe is mainly due to the expected decline in tax exempt income. 4) Industry recovery trend in May: In May 2024, the industry wide flight volume will recover to 101% of the same period in 2019, and the domestic, international and regional flight volume will recover to 108%, 73% and 65% of the same period in 2019 respectively. 5) The situation of listed airlines in April: In April, the six listed airlines added 4 aircraft in total. In April, only the available seat kilometers of Jixiang Airlines and the passenger turnover increased month on month, while the other airlines declined month on month. The passenger load ratio of Spring Airlines is in the absolute leading position. 6) The situation of listed airports in April: from the passenger volume data, the passenger volume of Haikou Meilan, Shenzhen Bao'an, Xiamen Airport, Shanghai Pudong, Guangzhou Baiyun and Beijing Capital respectively recovered to 118%, 103%, 99%, 96%, 91% and 67% in the same period of 2019. The flight volume of Haikou Meilan, Shenzhen Bao'an, Shanghai Pudong, Xiamen Airport, Guangzhou Baiyun and Beijing Capital was 123%, 105%, 100%, 97%, 91% and 75% respectively in the same period of 2019.
Investment suggestion: the supply and demand are expected to continue to improve, and the summer peak season is planned in advance. We believe that the aviation investment in June this year is mainly focused on the continuous recovery of supply and demand of international routes. It is expected that after the Dragon Boat Festival holiday, the middle school and college entrance examinations will gradually end, and the civil aviation will usher in the summer peak season. Against the background of the continuous rise in domestic and international demand, the industry's supply and demand pattern is expected to continue to improve, the aircraft utilization rate of each airline is expected to continue to recover, and the cost of seat kilometers is expected to continue to decline, So as to drive the continuous improvement of performance. It is recommended to focus on Huaxia Airlines with strong marginal improvement certainty and favorable regional subsidy policy, Chunqiu Airlines and Jixiang Airlines with strong performance certainty, and China Southern Airlines, the first of the three major airlines to turn losses into profits. It is recommended to focus on China Eastern Airlines, Shanghai Airport, and CITIC Haizhi, which is favorable for the low altitude economic policy.
Risk warning: macroeconomic downside risk, oil price rise risk, exchange rate fluctuation risk, and the risk that the information data used in the research report is not updated in time.
