China Southern Airlines (1055 HK) Domestic Market Is in a Period of Rapid Recovery April 12, 2021 245

PSR Recommendation: ACCUMULATE Status: Downgraded
Target Price: HKDHKD6.30

Investment Summary
Losses Are Less Than That of the Industry under the severe attack from COVID-19
Under the impact of COVID-19 Pandemic, CSA reported a total revenue of RMB92,561
million in 2020, down by 40% YoY. The net loss attributable to shareholders was RMB10,847
million, with decrease in profit or increase in loss of RMB13,487 million YoY. The LPS was
RMB0.77. In the same period last year, the EPS was RMB0.22. The EBIT was RMB16,126
million, down by 53.3% YoY. However, due to better performance in cargo business and a
higher share of the domestic market, CSA’s losses were less than that of the industry.
Cargo Business Is Thriving
Last year, the Company’s passenger transportation business was seriously dragged by the
pandemic. Passenger traffic turnover fell by 46.15% YoY. The capacity allocation decreased
by 37.6% YoY. The PLF was 71.46%, down by 11.35 ppts YoY. Passenger transportation
revenue was RMB70,534 million, down by 49.1% YoY.
Benefiting from the strong demand for air cargo for anti-pandemic materials, the Company’s
cargo revenue was RMB16,493 million, up by 71.5% YoY, of which international cargo
revenue rose by 93.6%. Cargo revenue accounted for 19% of transportation revenue, up by
12.5 ppts YoY; while passenger transportation revenue accounted for 81%, down by 12.5
ppts YoY.
In terms of revenue quality, the RPK was RMB0.46, down by 6.1% YoY. Cargo and mail RTK
was RMB2.27, up by 79% YoY. Due to the sharp contraction of supply, the unit revenue of
passenger transportation and cargo businesses on international routes performed
outstandingly, driving the overall yield to fall only slightly.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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