GUANGZHOU BAIYUN INTERNATIONAL AIRPORT(600004)：2022 RESULTS IN LINE WITH PREANNOUNCEMENT;TURNS PROFITABLE IN 1Q23 ON RECOVERY IN PASSENGER TRAFFIC AND EFFECTIVE COST CONTROL

　　2022 and 1Q23 results in line
　　Guangzhou Baiyun International Airport announced its 2022 and 1Q23 results. In 2022, revenue dropped 23% YoY to Rmb3.97bn, and net profit attributable to shareholders came in at -Rmb1.07bn （vs. -Rmb406mn in 2021）。 The 2022 results were in line with the firm’s preannouncement. Revenue dropped 48% QoQ to Rmb663mn in 4Q22, but rose 105% QoQ to Rmb1.4bn in 1Q23. Attributable net profit stood at -Rmb444mn in 4Q22 （vs. Rmb84mn in 4Q21） and Rmb45mn in 1Q23 （vs. -Rmb83mn in 1Q22）。
　　Full-year revenue declined more mildly than passenger throughput in 2022; operating cost slid. In 2022, the firm's passenger throughput dropped 35% YoY. Its full-year revenue declined more mildly than passenger throughput due to: 1） higher ASP of its aviation business as international routes outperformed domestic routes; and 2） some non-aviation businesses delivering sound performance. According to corporate filings, revenue of the IT service business, ground transportation service business, and VIP service business was up 6% YoY, down 22% YoY, and 24% YoY. Revenue of its advertising business fell 32% YoY as the firm allowed Dynamic Winning and JCDecaux to use some free advertising resources. The firm's operating cost dropped 6% YoY. Specifically, labor, depreciation, utilities, and maintenance costs fell 2%, 10%, 5%, and 5% YoY.
　　Passenger traffic recovered steadily in 1Q23; cost control effective. In 1Q23, the firm's revenue increased markedly YoY as the travel market recovered rapidly following the optimization of COVID-19 response measures in China. In 1Q23, passenger throughput increased 62% YoY, recovering to 75% of the 2019 level. Specifically, passenger throughput of domestic and international routes increased 54% and 567% YoY, recovering to 95% and 18% of the 2019 levels. In 1Q23, the firm's operating cost stood at Rmb1.13bn. Its cost declined 7% YoY, while passenger throughput increased YoY in 1Q23.
　　Trends to watch
　　DFS business saw volume and prices increase. According to the firm's operating data for March, the passenger traffic of its international routes recovered to 26% of the March 2019 level （up 8ppt MoM）。 We think recovery on passenger traffic of its international routes will accelerate during the summer-autumn aviation season. Data from China Customs Media shows that sales value of duty-free shops （DFS） at Guangzhou Baiyun International Port reached Rmb17.65mn in January 2023 （up 390% YoY）。 This implies sales value at around Rmb118 per customer, exceeding the 2019 level.
　　Financials and valuation
　　We maintain our 2023 and 2024 earnings forecasts at Rmb687mn and Rmb1.67bn. The stock is trading at 54.6x 2023e and 22.5x 2024e P/E. We maintain an OUTPERFORM rating and a target price of Rmb17.7. Our TP implies 25x 2024e P/E, offering 12% upside.
　　Risks
　　COVID-19 resurgence; slower-than-expected reopening of international routes; tough competition from other DFS; higher-than-expected capex.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。