Air China (601111) Annual Report Comment: International Share Gradually Increases Profitability and Steadily Increases

Key points of investment: The company released the 2018 annual report and achieved operating income of 1367.

$ 7.4 billion, an increase of 12 per year.

70%; net profit attributable to shareholders of listed companies 73.

$ 3.6 billion, an increase of 1 every year.


Dividend plan of the company: 1 cash dividend for every 10 shares.

03 yuan (including tax), a total of about 15.

10 billion.

Ping An’s view: Profit for four consecutive quarters: In 2018, fuel oil costs and exchange rates affected the cost of jet fuel by 100.

7 trillion, an increase of more than 35%, foreign exchange losses of more than 23 trillion, against this background, the fourth quarter still achieved profit, and the net profit attributable to shareholders of listed companies achieved positive growth, the company’s performance exceeded industry expectations.

International capacity has initially increased: With the increase in national gross national income, the company’s available seat kilometer (ASK) growth rate reached 10 in 2018.

41%, of which the international growth rate is 14.

06%, the proportion of international transportation capacity further increased; in terms of passenger transportation volume, the company’s passenger transportation volume in 2018 was about 1.

100 million person-times, an annual increase of 8.

02%, of which international routes and Hong Kong, Macao and Taiwan routes have higher growth rates, reaching 13.

92% and 11.

81%, significantly higher than the growth rate of domestic airline passengers.

Increasing profitability: The company’s cost control in 2018 is relatively large. Under the situation of rising oil prices and fuel costs, the seat kilometer cost (CASK) has increased by only 4%.

In terms of seat kilometer revenue, international routes have increased significantly, exceeding the increase by more than 5%.

Investment advice: The impact of oil prices and exchange rates on the company has gradually faded. In the long term, we believe that domestic aviation demand can continue to grow by more than 10%, and the external environment in which the company can continue to maintain performance growth still exists.

Under the situation of continuous tight supply, there is still room for the company’s average level to rise, and it is expected that the revenue of seat kilometers will further increase.

1) We think the company’s overall capacity growth rate in 2019 is about 7%. Considering the impact of the sale of Air China Cargo, it is estimated that the revenue in 2019 will be 137.4 billion yuan. 2) The current exchange rate will be about 18% lower than the end of 2018.The annual financial expenses are reduced by about 60% compared to 2018; 3) The average oil price since the beginning of 2019 and the decline in 2018 is more than 10%. It is expected that the fuel cost in 2019 will be reduced by about 5 billion.

Taking into account the above factors, we lowered the evolution forecast and expect the company’s net profit attributable to the parent company from 119 in 2019 and 2020.

2.8 billion, 佛山桑拿网 154.

65 trillion was reduced to 102.

9.2 billion, 114.

93 trillion, the net profit attributable to the parent company is expected to be 130 in 2021.

93 trillion, EPS is expected to be 0 in 2019-2021.

71 yuan, 0.

79 yuan, 0.

90 yuan, the corresponding PE is 15 respectively.

3, 13.

7 and 12.

Maintain the “Recommended” level.

Risk reminders: 1) policy risks, uncertainty in policy adjustments will bring policy risks to its development prospects; 2) risks such as oil prices, exchange rates, rising oil prices, and currency value decreases will all lead to profitable earnings; 3)Security risks. A security incident may deprive consumers of their confidence, which will lead to a significant decline in tandem revenue.