Author: Big Brother, Editor: Xiao Shimei
After three consecutive years of losses, the A-share super white horse has finally returned to the upward trajectory.
【Return of the King】
In the three years of the epidemic, China's aviation industry has been severely impacted, and Shanghai Airport, which is dominated by international passenger flow, is undoubtedly the hardest hit. From 2020 to 2022, Shanghai Airport's annual revenue was almost halved, with a total loss of nearly 6 billion yuan, and the decline in performance far exceeded that of airports in first-tier cities such as Baiyun and Shenzhen.
In the first year of post-epidemic reopening, the domestic aviation industry gradually recovered.
In 2023, China's civil aviation completed 1.212 billion domestic routes, an increase of 134.8% over the previous year, and 47.318 million international routes, an increase of 1184.6% over the previous year.
Shanghai Airport has also ushered in a reversal of difficulties.
Recently, Shanghai Airport announced its 2023 annual report, in which the company's operating income exceeded 11.047 billion yuan, a year-on-year increase of 101.57%, hitting a record high, and the net profit attributable to the parent company exceeded 934 million yuan, successfully turning losses into profits.
▲ Source: Straight flush
In the past many years, Shanghai Airport has operated only Pudong Airport, and this airport alone is not enough to achieve the current performance.
In 2023, Pudong Airport will handle 54.48 million passengers, nearly four times that of 2022, but a decrease of 28% compared to 2019. As international passengers are far less than before the pandemic, Pudong Airport's duty-free business, although it has increased nearly fourfold year-on-year, is less than half of what it was before the pandemic.
Shanghai Airport was able to return to the peak of revenue thanks to the asset restructuring more than two years ago.
In June 2021, Shanghai Airport announced that it intends to purchase 100% of the shares of Hongqiao Airport Company, 100% of the logistics company and the fourth runway of Pudong Airport held by Shanghai Airport Group through the issuance of shares.
According to the data of 2019, Pudong Airport has a passenger throughput of 76.097 million passengers, ranking second in the country, and Hongqiao Airport has a passenger throughput of 45.63 million passengers, ranking eighth among national airports. So far, Shanghai Airport no longer refers to Pudong Airport, but has become the representative of the entire Shanghai airport, and has also become the first A-share listed company with two super airports.
In 2023, Hongqiao Airport Company will achieve revenue of 3.151 billion yuan and net profit of 257 million yuan, and Airport Logistics Company will achieve revenue of 1.707 billion yuan and net profit of 467 million yuan, and the two newly merged companies will contribute half of the revenue and nearly 80% of the net profit.
In other words, the return of the king of Shanghai Airport is a send-off for the controlling shareholder, and it is also a strong combination of the two super airports.
Compared with Shanghai Airport, the passenger volume of the other three listed airports in the first-tier cities also rose sharply year-on-year, and in addition to the capital airport is still losing money, Baiyun Airport and Shenzhen Airport have achieved a turnaround, just because there is no major asset restructuring, and last year's revenue growth rate was much smaller than that of Shanghai Airport.
From the perspective of performance scale, the advantages of Shanghai Airport have been further expanded after solving the competition in the same industry.
【The Way to Win by Lying Down】
In the A-share market, Shanghai Airport has always been recognized as a super white horse by value investors, with a market value of nearly 220 billion yuan at its peak, nearly twice the market value of the other three listed airports in first-tier cities combined.
Shanghai Airport's standout is largely due to its unique geographical advantages, passenger structure and strong profit model.
Covering 80% of China's top 100 cities in a two-hour short flight from Shanghai, 2 to 5 hours to major Asian cities, and about 10 hours to the west coast of Europe and North America, Shanghai Airport is one of the most important aviation hubs in the country and the world.
The airport's income includes aviation income and non-aviation income, the former includes aircraft take-off and landing fees, passenger service fees, security fees, etc., which are set by the government, and the profit is low, and the income mainly depends on the number of aircraft take-off and landing and the scale of passengers;
As the country's largest city, Shanghai is located in the richest Yangtze River Delta region in China, with a population of more than 160 million, "Jiangsu, Zhejiang and Shanghai", which has almost become synonymous with the richest group in China today, bringing a steady stream of high-quality passengers to Shanghai Airport.
Before the epidemic, the international passengers of Shanghai Airport that have not completed the merger have been close to 50%, while the Capital Airport and Baiyun Airport are less than 30%, and Shenzhen Airport is less than 10%, and the international flights of Shanghai Airport are mainly for developed countries such as Europe, America, Japan and South Korea, and there are more high-end business travelers. With the huge passenger scale and excellent passenger quality, non-aeronautical revenue has always been the main source of revenue and profit for Shanghai Airport, and the rent collection of duty-free shops is the trump card business of lying and winning.
From 2017 to 2019, the rental income of Shanghai Airport Duty Free Shop increased year by year, with 2.555 billion yuan, 3.681 billion yuan and 5.210 billion yuan respectively, accounting for 31.69%, 39.53% and 47.60% of the operating income of that year.
For any duty-free businessman, the traffic value of Shanghai Airport's high-quality passenger source is extremely attractive:
First, its traffic is exclusive, and no one competes with it. Second, its traffic is zero-cost, or even negative-cost. Third, its traffic is screened, and it is in a closed space, passengers can't go, and the single customer value of traffic realization is very large.
Due to the high gross profit brought by the duty-free business, the profitability of Shanghai Airport is significantly stronger than that of several other airports in first-tier cities. In 2019, the net profit of Shanghai Airport exceeded 5 billion, which was twice that of Capital Airport, 5 times that of Baiyun Airport, and nearly 10 times that of Shenzhen Airport.
【Fly Higher】
In recent years, emerging technology industries such as new energy, semiconductors, and artificial intelligence have flourished, traditional high-quality consumer stocks have been falling endlessly in A-shares, and the share price of Shanghai Airport has also fallen by 60% from its high, and its market value has evaporated by more than 120 billion.
It's not just the short-term impact of the pandemic that is causing stock prices to fall. In the eyes of many people, due to the declining domestic birth population, China's industrial transformation is the general trend, the growth space of the traditional consumer market is limited, and Shanghai Airport is already facing a long-term performance ceiling.
This perception is actually intolerant. With such a huge size of China's economy and the rise of the emerging technology industry, it does not mean that traditional consumption has lost its potential.
In China, where GDP per capita has crossed $10,000, penetration rates in many consumer sectors, including air travel, are still extremely low: in 2019, some people calculated that almost 1 billion people in China have never flown and 1.3 billion have never traveled abroad. Under the consumption upgrade and the huge population base, air travel, which has the advantage of floating pricing, obviously still has a lot of room for growth. Airports, especially those on international routes, will also benefit significantly from the increased penetration of air travel.
At the 2024 National Civil Aviation Work Conference, the Civil Aviation Administration of China proposed that the international passenger transport market will accelerate its recovery, and it is expected to recover to about 80% of the pre-epidemic level by the end of 2024. As the most important international aviation hub in China, the operation of Shanghai Airport is also still improving, especially for international passengers.
In the first quarter of 2024, the passenger throughput of Pudong Airport was 18.27 million passengers, and Hongqiao Airport was 11.61 million passengers, continuing to grow significantly compared with 2023, of which the number of international passengers has recovered to about 70% of the same period in 2019, a significant recovery compared with last year.
In the summer and autumn aviation season that began on March 31, Shanghai Pudong and Hongqiao airports planned to carry out an average of 566 international, Hong Kong, Macao and Taiwan passenger flights per day (including 521 flights at Pudong Airport and 45 flights at Hongqiao Airport), a year-on-year increase of 91.2%.
Pudong International Airport, which mainly operates international routes, plans to add four new routes in the summer and autumn season: Athens in Greece, Riyadh in Saudi Arabia, Manchester in the United Kingdom and Penang in Malaysia, and three routes to Brussels in Belgium, St. Petersburg and Novosibirsk in Russia. At that time, Pudong Airport will have 90 international, Hong Kong, Macao and Taiwan destinations, including 26 important intercontinental passenger destinations such as London, Paris, Rome, Los Angeles, Frankfurt and Sydney, and at least one flight per day can arrive.
Policy-level support is also supporting exchanges between China and the world.
As of early March this year, China has concluded visa exemption agreements with 157 countries covering different passports, of which 23 countries have achieved full visa exemption arrangements with China, and more than 60 countries and regions have granted visa-free or visa-on-arrival treatment to Chinese citizens.
International passengers and duty-free income are the core factors that determine whether Shanghai Airport can be profitable and profitable. It can be expected that with the gradual recovery of international tourist volume at Shanghai's two major airports, especially Pudong Airport, and the return of duty-free agreements to 2018 from this year, the duty-free revenue and overall profitability of Shanghai Airport will continue to grow significantly in 2024.
The "airport mao", which has high hopes from investors, is far from the time to land.
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The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.), and the information or opinions in this article do not constitute any investment or other business advice, and Market Value Watch does not assume any responsibility for any actions arising from the adoption of this article.
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