Air China (601111): Capacity continues to grow and exchange rate risks are expected to ease current expected attractiveness

Air China (601111): Capacity continues to grow and exchange rate risks are expected to ease current expected attractiveness

The company’s recent situation Air China 南宁桑拿 announced operating data for September: demand (RPK) increased by 5% and supply (ASK) increased by 4.

9%, the load factor rose 0 in ten years.

1 up to 80.

6%.

On January 9, 2019, the company’s RPK exceeded growth by 6.

2%, may I increase by 5 per year.

6%, the cumulative load factor increased by 0 every year.

5 up to 81.

4%.

Comments were dragged down by international routes, and the capacity growth rate in September was further reduced.

The company’s ASK increased by half a year in September.

9%, down from 5 in August.

6%, down from 6 in the same period last year.

3%, mainly due to the increase or drag on the capacity of international routes, the international route ASK increased by 1 in September.

9%, earlier of August 2.

9% further forecast, actually lower than the same period last year.

7% growth.

Taken together, the company’s ASK increased by more than 5 from July to September.

4%, significantly lower than the same period last year.

2%.

The passenger load factor increased slightly in the first half of the year.

The company ‘s passenger load factor increased slightly by 0 per second in September.

1 up to 80.

6%, of which the regional line affected by the local area of Hong Kong and Taiwan affected the change in load factor by 10.

3ppt to 68.

6%, the decline has increased compared to August.

Taken together, the company ‘s passenger load factor increased by 0 from July to September.

4ppt to 82.

1%, of which domestic demand is weak, and the load factor has dropped slightly.

2ppt, the international supply and demand structure is improving, and the load factor has increased by more than 1.

8ppt, the regional line is affected by the influence of Hong Kong and Taiwan, the demand is extended, and the load factor is reduced by nearly 7ppt.

We judge that the previous exchange rate risk has a mitigation indicator, and the current estimated level is attractive.

According to the judgment of the China Gold Group, recent progress has been made in China-US economic and trade integration. If the two sides suspend the tariff levy plan or even partially cancel the previously imposed tariffs, the RMB exchange rate may appreciate at a greater level.

According to our calculations, the impact of the consolidation of the lease table, a 1% change in the exchange rate of RMB against the US dollar will affect the company’s long-term net profit.

80,000 yuan (accounting for about 5% of 2019E net profit), the rebound of the RMB exchange rate is good for the company’s fourth quarter profit.

The company’s current A / H shares P / B are near the historical average minus one standard deviation, and we think the forecast is expected to usher in a repair.

It is estimated that the company currently can sustainably correspond to 2019/202012.

3/9.6 times P / E, 1.

2/1.

1x P / B.

Maintain 2019 / 2020e profit forecast of 100.

49/127.

69 trillion is unchanged.

Maintain A / H shares outperform industry rating and target price of RMB.

10 yuan (corresponding to 16.

1x 2019 P / E, 1.

6 times P / B, 31% increase in space) / HKD 9.

20 yuan (corresponding to 11.

9 times 2019 P / E, 1.

2x P / B, 29% growth space).

Risks Aviation demand fell short of expectations; RMB depreciated sharply against the US dollar; oil prices rose sharply.