China Southern Airlines (600029): Passenger load factor leads the three major airlines

China Southern Airlines (600029): Passenger load factor leads the three major airlines

Event: The company released the third quarter report of 2019, and the first three quarters achieved operating income of 1166.

65 ppm, a ten-year increase of 7.

14%; net profit attributable to mother 40.

78 ppm, a decrease of 2 per year.

32%; net profit deducted from non-mother 36.

01 billion, down 1 year.


Among them, Q3 achieved operating income of 437.

2.6 billion, an annual increase of 5.

79%; net profit attributable to mother 23.

88 ppm, a ten-year increase of 17.


  RPK growth and passenger rate led the three major airlines, and seat-km revenue declined.

The company’s ASK increased by 10 in the first three quarters.

35%, RPK increased by 10.

65%, load factor 83.

01%, an increase of 0.


Among them Q3ASK grew for ten years.

76%, RPK increased by 11 in ten years.

10%, load factor 83.

66%, an increase of 0.

26pct, the company’s RPK growth rate and load factor level is the highest of the three major airlines.

Revenue from seat kilometers in the first three quarters decreased by approximately 3%, while income from seat kilometers in Q3 decreased by 4%.

5%, the quality of the revenue decreased, but the revenue of seat kilometers decreased more than Air China and China Eastern 杭州桑拿网 Airlines.

  The interest rate expenditure on operating leases has increased, and exchange losses have been amplified to affect performance.

After the operating lease entered the table, the company’s Q3 interest expense was 15.

120,000 yuan, an increase of 6.

4.5 billion; according to the semi-annual report information, the exchange sensitivity is 5.

At 17 trillion, we calculated that the exchange loss in Q3 was 23 trillion, an increase of 7 from the same period last year.


Excluding exchange losses and non-recurring gains and losses, the company’s Q3 non-net deduction of non-net profit was 50.

30,000 yuan, an annual increase of 38.


  The company plans to issue non-public shares, and its fleet structure and asset denial structure are expected to be further optimized.

The company plans to issue non-public shares to China Southern Airlines Group and Nanlong Holdings not exceeding 30.

6.6 billion shares, and raised 16.8 billion US dollars for the transfer of 31 aircraft and repayment of company shares. The controlling shareholder increased his holdings in cash.

The improvement and improvement of 31 aircrafts further improved the company’s capacity, optimized the fleet structure, expanded the capacity of major routes, and improved the company’s route network; reimbursement replaced improved financial conditions and optimized asset resistance structure.  Investment suggestion: The company’s domestic routes account for a high proportion, the passenger load factor leads the three major airlines, and the fare is flexible. Considering the aviation demand remains to be observed and the relative uncertainty of the oil and gas exchange environment, the company’s EPS is expected to be 0 in 2019/2020/2021.



67 yuan, PE is 17x, 13x, 10x, downgraded to “overweight” level.

  Risk reminder: Macroeconomic growth significantly, crude oil prices increase sharply, exchange rate fluctuations intensify