GUANGZHOU BAIYUN INTERNATIONAL AIRPORT(600004)：PREANNOUNCED 2Q23 RESULTS SLIGHTLY BEAT;WATCH PER-CUSTOMER SALES AT DFS

　　Preannounced 2Q23 earnings results turned YoY positive
　　Guangzhou Baiyun International Airport preannounced its 1H23 results.
　　Estimated attributable net profit was Rmb142-174mn (vs. a loss of Rmb517mn in 1H22). For 2Q23, estimated attributable net profit was Rmb97-129mn (vs. Rmb45mn in 1Q23 and a loss of Rmb435mn in 2Q22). The firm's preannounced 2Q23 results slightly beat our expectations, which we attribute mainly to its enhanced cost control.
　　Trends to watch
　　Operations continue to improve in 1H23. Guangzhou Baiyun
　　International Airport’s operations have gradually recovered in 1H23.
　　Specifically, the number of domestic passengers has already surpassed pre-COVID-19 levels. In April, May, and June, domestic passenger throughput recovered to 107%, 100%, and 102% of 2019 levels.
　　Passenger throughput of international routes is recovering and showing monthly improvement. In April, May, and June, international (including regional) passenger throughput recovered to 37%, 42%, and 47% of 2019 levels (vs. 7% in December 2022).
　　Looking ahead, we expect the firm’s business operations to gradually recover quarterly in 2023. According to its official WeChat　account1, the firm expects total passenger traffic to exceed 11mn in the summer of 2023, recovering to over 86% of the 2019 level. We think the continuous recovery of the company's operations is driving the revenue growth of its aviation business and related businesses.
　　Watch per-customer sales at DFS. Data from China Customs Media2　shows that sales value of duty-free shops (DFS) at Guangzhou Baiyun International Port reached Rmb17.65mn in January 2023. This implies sales value at around Rmb118 per customer, exceeding the average level of Rmb103 in 2019. Data from China Guomen Shibao3 shows that sales value of DFS at Guangzhou Baiyun International Airport reached nearly Rmb200mn in 5M23. In addition, the average turnover time of duty-free inventory was shortened to less than one week, and for certain popular items, the turnover time was further reduced to just 1-2 working days.
　　We estimate that the firm's per-customer sales at DFS were approximately Rmb97, indicating a potential decline after January. This decline may be attributed to factors such as the availability of goods. Its performance demonstrates elasticity in response to high revenue sharing ratios from duty-free sales, in our opinion. We suggest keeping an eye on the firm’s per-customer sales at DFS.
　　Financials and valuation
　　We keep our 2023 and 2024 earnings forecasts unchanged at Rmb687mn and Rmb1.67bn. The stock is trading at 20.1x 2024e P/E. We maintain an OUTPERFORM rating and a target price of Rmb17.70 (implying 25.1x 2024e P/E), with 25% upside.
　　Risks
　　Slower-than-expected recovery of international passenger volume; slower- than-expected DFS sales growth; disappointing progress of DFS
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   【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。