Air China (601111) Annual Report Commentary: Performance Exceeds Expectations, Industry Prosperity Increases

Air China (601111) Annual Report Commentary: Performance Exceeds Expectations, Industry Prosperity Increases

Event: The company announced its 2018 annual report and achieved operating income of 1367 in 2018.

700 million, +12 a year.

7%; net profit attributable to mother 73.

4 trillion, +1 a year.


Of which 18Q4 revenue was 338.

900 million, +19 per year.

5%; net profit attributable to mothers 4 trillion, an annual increase of 14 trillion.

  In 18 years, the growth rate of supply and demand increased, and the load factor decreased slightly.

2018 company ASK + 10.

39%, RPK + 9.

64%, the overall growth rate of supply and demand 西安耍耍网 increased; external passenger load factor reached 80.

59%, a decrease of 0.

55 points.

Domestic routes ASK and RPK increase by 8 each year.

21%, 7.

47%, load factor decreased by 0.

57pct to 82.


International routes ASK and RPK increased significantly, with growth rates of 14 respectively.

13%, 13.

21%, load factor decreased by 0.

64pct to 77.


  Q4 profit is increasing, the company’s foreign exchange deduction performance increased by 40% than expected.

The 18-year average oil distribution price was US $ 71 (+ 31%), driving the company’s aviation fuel cost to +35.

45%, the company’s non-oil cost control is good, the unit ASK non-oil cost -3.

4%; 18 years of RMB depreciation against the US dollar5.

5%, the company’s exchange loss was 23.

7.7 billion.

In 18 years, the company withdrew a profit of 122 trillion U.S. dollars, a substantial long-term growth of 40.


Initial passenger-kilometer income is 0.

546 yuan, an annual increase of 2.

9%, a significant improvement in operating efficiency, Q4 passenger kilometers revenue growth and growth of 10%; Cathay Pacific operations significantly improved, driving the company’s investment income increased to 13.

68 ppm, an increase of 16 per year.

7.5 billion, increasing net profit.

  The prosperity of the industry has improved, and the transition of Daxing Airport is conducive to long-term development.In terms of oil exchange: We believe that the upward space for oil prices in 19 years is limited. The exchange rate is good for airline revenue. In 19 years, the RMB has appreciated by 2%, and the exchange rate flexibility has been enlarged under the new accounting standards.

The recent Boeing incident has compressed the industry supply and increased the company’s fare upside.

The new airline season schedule is announced, and Air China ‘s overall time is growing by 7.

9%, the second and third tier airports will gradually increase the volume, which will help the company to optimize flight schedules. In the future, Daxing Airport will gradually complete the transfer within 5 seasons. Air China will remain operating at the Capital Airport. In the long run, it will help increase the flight capacity of the Beijing market and consolidate the company.Advantages in the main base of Capital Airport.

  Investment suggestion: The current aviation performance is at a low level of performance expectations and estimates. The company’s EPS for 2019-2021 is expected to be 0.

76, 0.

92, 1.

01 yuan, corresponding to PE of 13x, 11x, 10x, maintaining the “buy” level.

  Risk warning: The macro economy has grown sharply, crude oil prices have increased sharply, and exchange rate fluctuations have intensified.

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