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1、 Please read the disclaimer at the end of the report Equity Research Report / Sector Research / Airline expect some airports to post more than 10%- earnings growth in 2013E. Airport operators are less affected by macroeconomic conditions and their earnings have been increasing steadily. Baiyun Intl
2、Airport benefits from the building of an international hub at Guangzhou Airport by China Southern Airlines (CSA) and we expect its earnings to continue to rise briskly in 2013E. Xiamen Intl Airport is likely to see its retail space rental surge after the once-every-four-years non-aviation airport bu
3、siness bidding exercise in 2013E. Given the vast potential for development in general aviation, focus on growth shares. We forecast that the operational hours of general aviation (GA) will increase at a CAGR of 16% or more during the 12th Five-Year Plan (FYP) period (2011-15). The reform of low-alti
4、tude air space management will be launched nationwide in 2013E. The GA sector is likely to register faster-than-expected growth. Some listed airlines are making preparations for investment in GA. In the initial phase of GA development, service providers and manufacturers in GA-relevant businesses ar
5、e expected to gain. Examples include Haite High-Tech, Wisesoft, Weihai Guangtai Airport Equipment and Sun-create Electronics. Some companies may see their earnings increase at a CAGR of 30-40% over the next three years. Potential risks: (i) Worse-than-expected decline in macro growth may curb demand
6、 and oil price could surge again; (ii) the RMB/USD exchange rate could be highly volatile; (iii) potential adverse outbreaks such as regional tension and pandemics; and (iv) slower-than-forecast growth in GA. CITIC Securities Research Baoliang Su Tel: 010-60838727 Email: Practicing Licence No.: S10
7、10512050002 Hongbo Zhang Tel: 010-84588387 Email: Practicing Licence No.: S1010510120045 Performance relative to index -20% -10% 0% 10% 20% 30% 12-01 12-03 12-05 12-07 12-09 12-11 航空机场(中信)沪深300 Source: CITIC Securities Research CSI 300 Airline focus on stocks with growth assurance 11 GA operators A
8、 direct beneficiary 12 ATC system developers and trainers - First to benefit 13 GA aircraft manufacturers - The biggest beneficiary 15 Risks associated with investing in the airline and airport sectors 15 Surging oil prices 15 Regional tension . 16 Wild forex fluctuations . 16 Investment strategy: M
9、onitor oil prices for aviation, pick airports for defensive investing, and focus on GA for growth stocks . 16 Airline investment strategy: Monitor oil prices, and capture investment opportunities amid fluctuations 16 Airport investment strategy: Pick stocks with solid earnings growth 19 GA investmen
10、t strategy: focus on growth stocks 22 2013E Annual Investment Strategy Airline (ii) leading GA operators and maintenance companies, such as Haite High-Tech; and (iii) leaders in GA basic services and equipment sub-sectors, such as Wisesoft, Weihai Guangtai Airport Equipment and Sun-create Electronic
11、s. In the initial phase of GA development, we suggest following Haite High-Tech, Wisesoft, Weihai Guangtai Airport Equipment and Sun-create Electronics. We strongly recommend Haite High-Tech, a prominent subsidiary of the domestic aircraft maintenance group AVIC 1. As the major beneficiary of scale
12、expansion in aviation manufacturing (especially the production of helicopter engine ECU modules) and aviation training, the Company may post an earnings growth at a CAGR of 30-40% over the next three years. In 2012, airline profits declined 40% YoY while airports posted solid profit growth In 1-3Q12
13、, aviation demand picked up from a low level with narrowing YoY growth The domestic aviation industry was in recession with a sluggish demand during 1H12, and registered a 70% drop in profit from the year-ago period. With the fast decline in jet fuel price in May-Jun exerting less cost pressure, air
14、line stocks fared relatively better in 2Q12. After commencing the peak summer season, passenger traffic grew 10.2% YoY in 3Q12 and PLF remained at high levels. However, due to the substantial forex gains during the same period in 2011, airlines posted forex losses in 3Q12. As the result, profits of
15、the airline sector dropped 15% YoY in 3Q12 alone. The airline sector inched up from a low start in 1-3Q12, with passenger turnover growth and passenger traffic growth of 10.6% and 9.2% YoY, respectively. Aviation demand retreated again in Oct 12, resulting in marked slowdown in growth (passenger tra
16、ffic growth +6.8% YoY; 2013E Annual Investment Strategy Airline cargo/mail volume -7.8% YoY). In Oct 12, profits of Chinese airlines plunged 39% YoY. November recorded weak business travel as well as a low season for tourism. We expect preliminary improvement in business travel towards end-Dec 12E.
17、Persistently high cost for aviation fuel and forex losses dragged down 1-3Q12 profits by 40% YoY. In 2012 up to 30 Nov, the airline sector dropped 23% YoY, underperforming the CSI 300 by 14.2ppts. During the 2012 bear market, airline stocks performed relatively well on the back of sharp jet fuel pri
18、ce declines in 2Q12, but could hardly distance itself from the overall downbeat trend. Fig. 1: Earnings of A-share airline companies vs. GDP and CPI growth -300 -250 -200 -150 -100 -50 0 50 100 150 200 200803 200806 200809 200812 200903 200906 200909 200912 201003 201006 201009 201012 201103 201106
19、201109 201112 201203 201206 201209 201212 (4) (2) 0 2 4 6 8 10 12 14 净利润（左轴）亿元CPI同比增速（右轴）%GDP同比增速（右轴）% Source: CAAC, CITIC Securities Research Fig. 2: PLF of domestic airlines, 2010-12 (%) Source: CAAC, CITIC Securities Research Fig. 3: Airfare trend of domestic airlines Source: CAAC, CITIC Securiti
20、es Research Fig. 4: YoY decline in profit of Big Four domestic airlines, 1-3Q12 (%) -46.2% -37.0% -55.0% -30.9% -60% -50% -40% -30% -20% -10% 0% 中国国航东方航空南方航空海南航空 Source: Respective companies, CITIC Securities Research Airport operators posted steady rise in earnings Domestic airport revenue mainly c
21、omes from aviation and non-aviation businesses, which accounted for 65% and 35% of their total revenue in 2011. In 2012, business travel faced Net profit (Rmb 100mn, L) CPI growth (YoY, %, R) GDP growth (YoY, %, R) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Domestic routes combined air ticket i
22、ndex International routes (excl. Asia) air ticket index Asia, Hong Kong and Macau routes air ticket index AC CEA CSA HA 2013E Annual Investment Strategy Airline Xiamen Intl Airport: +14.6% YoY). A-share airport stocks are valued at 10x prospective 2012E PER, representing an advantage versus internat
23、ional peers. As of 30 Nov 12, the airport sector outperformed the CSI 300 by 5.5ppts. Fig. 5: Performance of airline/aviation vs. CSI 300 in 2012 (as of 30 Nov 12) - 8 . 8 % - 1 3 . 7 % - 3 . 3 % - 2 3 . 0 % - 2 5 % - 2 0 % - 1 5 % - 1 0 % - 5 % 0 % Source: Wind, CITIC Securities Research Fig. 6: Pe
24、rformance of airports vs. CSI 300 in 2012 (as of 30 Nov 12) - 8 . 8 % 9 . 7 % - 2 . 6 % - 3 . 6 % - 1 5 . 7 % - 2 0 % - 1 5 % - 1 0 % - 5 % 0 % 5 % 1 0 % 1 5 % 3 0 0 Source: Wind, CITIC Securities Research Fig. 7: Profit growth of Big Four domestic airports, 1-3Q12 1 6 . 3 % 1 4 . 6 % 3 . 4 % - 1 5
25、. 3 % - 2 0 % - 1 5 % - 1 0 % - 5 % 0 % 5 % 1 0 % 1 5 % 2 0 % Source: Respective companies, CITIC Securities Research The aviation industry will see supply-demand balance with cost pressure easing in 2013E Aviation supply-demand forecast to grow 11% YoY in a relative balanced pattern in 2013E 2013E
26、demand: +11% YoY Revenue passenger kilometer (RPK) of Chinese airlines increased 10.6% YoY in 1-3Q12, and is forecast to grow 9% YoY in 4Q12E. Demand diverged on international routes in 3Q12, with the North American front recovering better than European routes. The demand trend was reversed in 4Q12,
27、 with narrowing growth in international routes, decline in Japanese routes, and PLF worse than the year-ago period for Australia despite 4Q12 being a peak season. Business travel is closely related to the level of investments. The governments increased investment in fiscal infrastructure and money s
28、upply to stabilize growth will boost some of the business travel demand. With acceleration in railway and other infrastructure CSI 300 Transportation Airport Airline CSI 300 Baiyun Intl Airport Xiamen Intl Airport Shanghai Airport Shenzhen Airport Baiyun Intl Airport Xiamen Intl Airport Shanghai Air
29、port Shenzhen Airport 2013E Annual Investment Strategy Airline (ii) the average overseas purchase price was Rmb7,034/tonne (+8% YoY); (iii) the average purchase price for international flights at the six major airports (which are in line with international oil prices) was Rmb7,232/tonne (+5% YoY); a
30、nd (iv) the average purchase price for domestic flights was Rmb8,367/tonne (+5% YoY). In Oct 12, the average purchase price of jet fuel amounted to Rmb7,800/tonne. According to the oil price forecast of our Petroleum/Petrochemicals Team, if oil price declines 8% YoY in 2013E, the average purchase pr
31、ice of jet fuel of airlines will drop nearly Rmb600/tonne. The ex-factory price (incl. tax) of domestic jet fuel stood at Rmb7,668/tonne in 1H12, and Rmb7,500/tonne in 2012. In Nov 12, it increased to Rmb7,929/tonne, Rmb428/tonne higher than the same period in 2011. High oil prices weighed on the se
32、ctors profitability. If oil price declines sharply in 2013E, airline stocks will see potential trading opportunities. Fig. 11: Ex-factory price of domestic jet fuel (Rmb/tonne) Source: Wind, CITIC Securities Research Fig. 12: International oil price movements (US$/bbl) Source: Wind, CITIC Securities
33、 Research Fig. 13: CITIC Securities Researchs international oil price forecast Source: , CITIC Securities Research Petroleum/Petrochemicals Team Note: Forecast data for Dec 12 and beyond WTI light crude oil (futures settlement price) Singapore jet fuel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
34、 US$/bbl Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013E Annual Investment Strategy Airline (ii) Shanghai Intl Airport: +7% YoY (+6.7% YoY in 1-3Q12). In 2013E, Shanghai Intl Airport posted passenger growth of 9.1% YoY and cargo/mail growth of -8.7% YoY; (iii) Xiamen Intl Airport: +8.5% YoY, b
35、enefitting from economic constructions on the west of Taiwan Strait; and (iv) Shenzhen Airport: +7.5% YoY. After the scheduled commencement of T3 terminal operation in 1H13E, the provision for depreciation of the new terminal will exert pressure on the airport operators earnings. In 2013E, capacity
36、growth of airlines (+11% YoY) will spur the stable growth of airport earnings (forecast at 10%-15% YoY for Baiyun Intl Airport, Xiamen Intl Airport and Shanghai Intl Airport). Fig. 16: Change in flight movements of listed A-share airports (YoY, %) Source: CAAC, CITIC Securities Research Fig. 17: Cha
37、nge in passenger traffic of listed A-share airports (YoY, %) Source: CAAC, CITIC Securities Research Pudong Airport Shenzhen Airport Baiyun Intl Airport Xiamen Intl Airport Pudong Airport Shenzhen Airport Baiyun Intl Airport Xiamen Intl Airport 2013E Annual Investment Strategy Airline one runway. In
38、 2011, aircraft movements reached 136k; passenger traffic amounted to 15.76mn (+19.3% YoY) and ranked #11 nationwide. After commencing in 2011, T4 and the Airport Logistics Centre are forecast to complete and commence operation in Jun 14E. Positioned as a domestic terminal, T4 has a construction are
39、a of 72k m2 and is designed to accommodate 10mn-12mn passengers p.a. T4 investment: Rmb1bn. The project is financed by major shareholder Xiamen International Airport Group. Xiamen Intl Airport has Rmb500mn cash in hand. Its annual operating cash flow is forecasted at Rmb500mn. After T4 is put into u
40、se, Xiamen Intl Airport may acquire it with cash, which wont take place until after 2015E. The ListCo has no major CAPEX plans for the next three years. Shanghai Intl Airport Two terminal buildings (T1 three runways; designed capacity: 80mn passengers In 2011, Pudong Airport logged aircraft movement
41、s of 344k and passenger traffic of 41.45mn, up 3.6% YoY and 2.2% YoY, respectively. After improvement and expansion, T1 will integrate with S1 satellite terminal and accommodate a long-term passenger traffic of 36.8mn p.a. Construction of the fourth and fifth runways are being planned, with construc
42、tion works scheduled to begin by end-2012E and complete in 2014E. T1 improvemen t costs Rmb1.2mn. T1 improvement is paid by the ListCo itself. The fourth runway (Rmb2.77bn) is financed by Shanghai Intl Airport Group. The fifth runway (Rmb6.75bn) is entirely financed by the Shanghai Municipal Governm
43、ent. Construction of the fourth and fifty runways will not involve any CAPEX for the ListCo. Shenzhe n Airport Two blocks (A two runways; designed capacity: 18mn passengers In 2011, passenger traffic amounted to 28.25mn (+5.7% YoY) and aircraft movements stood at 224k (+3.4% YoY). Scheduled to comme
44、nce operation in 2013E, T3 is designed with a passenger capacity of 45mn and 370k flight movements by 2020E. Total construction area is in excess of 800k m2 (500k m2 for main terminal building + 300k m2 for commercial and transportation facilities), including nearly 30k m2 of commercial space. T3 in
45、vestment: Close to Rmb8bn. Shenzhen Airport has Rmb3bn in hand. Its annual net operating cash flow comes in at Rmb750mn. The capital shortfall will be met by the issuance of Rmb2bn convertible bond, Rmb1.1bn corporate bond, and short-term financing of Rmb300mn. The new terminal building will incur d
46、epreciation expense in 2012E. Baiyun Intl Airport T1 and two runways; designed capacity: 25mn passengers In 2011, aircraft movements grew 6.1% YoY (to 349k) and passenger traffic grew 9.9% YoY (to 45.04mn). Construction of the third runway began in end-Jul 12 and is scheduled to become operational i
47、n 2014E. T2 will begin construction by end-2012E and will be put into use by 2016E. After coming on stream, the third runway will boost the flight movements of the east runway by 40% during peak hours. Setting 2020E as the target year, T2 and the third runway require total investment of Rmb18.85b n
48、Of the total investment of Rmb18.85bn, Rmb800mn will be subsidized by the Civil Aviation Development Fund. The rest will be mostly financed by the Guangdong Provincial Government and Guangdong Provincial Airport Group. The ListCo has not yet decided on the capital contribuition. 2013E Annual Investm
49、ent Strategy Airline focus on stocks with growth assurance The GA sector is a sunrise industry with vast potential for future growth. The Opinions on Intensifying the Reform and Management of Chinas Low-altitude Airspace issued in 2010 pointed out that 2011-to-end-15 will be a phase for the nationwide promotion of pilot schemes. The Civil Aviation Development Plan in China during the 12th FYP Period launched in 2011 set clear goals in speeding up the