China Southern Airlines (600029) Quarterly Comment: Performance is slightly lower than expected but optimistic about the summer season

China Southern Airlines (600029) Quarterly Comment: Performance is slightly lower than expected but optimistic about the summer season

The performance in the first quarter of 19 increased slightly 4.

1%, slightly lower than expected; but in the summer season, there is great flexibility, maintaining the “buy” of China Southern Airlines in the first quarter of 2019 revenue, net profit changes each increased by 10.

4% / 4.

1%, gross margin 深圳桑拿网 improved slightly in the short term.

3 units but the net interest rate dropped by 0.

4 levels with better performance than our navy forecast (28.

6.4 billion) low 7.


The decline in oil prices and the increase in foreign exchange earnings have benefited the company’s performance, but the management expenses have increased by 20%. Operating lease income has led to doubling of index expenditures and declining expenditures have dragged down performance.

In addition, investment income and asset disposal income decreased year by year in the first quarter.

5% / 83.

9%, but increased airline subsidies increased other earnings by 169.


Taking into account that the 737Max is expected to be grounded and the first shipment is favorable for the supply and demand relationship, the fare release continues to advance, and the 2019E / 20E / 21EEPS is raised to 0.



62 yuan, the updated target price range is 10.


70 yuan, to maintain a buy.

Supply growth is stable, strong international demand has driven the total passenger load factor to continue to increase, even through the Civil Aviation Administration’s supply tightening policy continued, the company through the cabin seat reform, through increasing the supply of supply, the total supply in the first quarter even continued to increase.

3%, of which the domestic increase of 10 in ten years.

4%, slightly lower than about 0 compared with the same period last year.

1 average, an increase of 13 in the International Decade.

4%, which is faster than the same period last year.

9 averages.

Aggregate demand has grown steadily, increasing by one year.

1 up to 10.

8%, of which international demand is strong, exceeding value-added by 15.

2%, an increase of 3.

One single, domestic line or due to the impact of weather, demand increases only 10 per year.

4%; total load factor increased by 0.

5 up to 82.

9%, of which domestic line is flat, international improvement is improved1.

3 units.

We analyze that the company may still adopt the strategy of heavy passenger seat rate and light air ticket, and calculate that the score in the first quarter decreases by about 0 each time.


Oil prices and exchange rates are good, but the increase in expenses has dragged down performance. According to the latest data from Wonder, the ex-factory price of aviation kerosene fell in the first quarter of this year.
8%; RMB appreciates against USD 1.
89% (the same period last year increased by 3.

77%), as the increase in the size of US dollar debt due to the entry of operating leases has increased the sensitivity of exchange losses and gains. It is estimated that exchange gains will increase by about 6%, which is good for performance.

However, the company’s management expenses increased by 20% in the first quarter, and the operating lease entry led to an increase in index expenditure of approximately RMB 700 million, which dragged down the total operating costs by 11.


Looking forward to 2019, considering the 18-year high oil price, the depreciation of the renminbi has created a low performance base, and this year’s exchange rate oil price trend is relatively favorable, and the exchange sensitivity has become greater; and increasing the Boeing 737MAX8 towards the grounding to the summer season, leading to good performance in supply and demandWe expect the company’s profits to increase significantly.

Increase earnings forecast and adjust target price range by 10.


70 yuan, maintain the “Buy” rating. Considering that the 737Max is expected to be suspended until the summer season, the industry supply and demand relationship will improve, and the full price of domestic economy class will be released. We will continue to promote it. We are optimistic about the company’s potential to increase its scale and raise 2019/20/21 Annual fare 1.

0% / 1.

1% / 1.

1%, raise the net profit forecast for 2019/20/21 by 22 each.

5% / 16.

7% / 15.

4% to 92.



600 million yuan.

Given the ROE proposal pick up in 2019, give 1.


8x 2019PB (BPS is expected to be 5 in 2019.

93 yuan, 北京桑拿洗浴保健 the company’s five-year PB multiple average of 1.

5x PB), adjust the target price range of 10.


RMB 70, maintain “Buy” rating.

Risk reminders: Oil prices continue to increase, the appreciation of the RMB, the speed of high-speed rail, the trend of economic growth, force majeure such as major epidemics or natural disasters, and growth at peak hours is not as expected.