SHANGHAI INTERNATIONAL AIRPORT(600009)：1Q24 RESULTS IN LINE; WATCH RECOVERY OF DFS BUSINESS-格隆汇

机构：中金公司
研究员：Qibin FENG/Qikun WU/Xuejian ZHENG/Xin YANG

1Q24 results in line with our expectations
Shanghai International Airport announced its 1Q24 results: Revenue rose 41% YoY but fell 3% QoQ to Rmb3.03bn, and attributable net profit was Rmb386mn (vs. -Rmb99mn in 1Q23 and Rmb437mn in 4Q23), largely in line with our expectations.
1Q24 business volume growth sound; waiting for recovery of duty- free business. In 1Q24, the firm’s two airports reported 32% YoY and 5% QoQ growth in aircraft takeoffs and landings, recovering to 102% of the level in the same period of 2019. In 1Q24, the two airports reported 59% YoY and 12% QoQ growth in their passenger throughput, recovering to 101% of the same period in 2019. Specifically, passenger throughput of domestic routes and international routes recovered to 115% and 75% of the level in the same period of 2019.
The firm’s QoQ revenue growth was slower than the corresponding business volume growth, possibly due to the slow growth of some non- aviation revenue, in our view. The firm recognized duty-free rental income of Rmb347mn in 1Q24 (vs. around Rmb480mn in 4Q23). Based on the average revenue-sharing ratio of 18-36% in the firm’s DFS contract, we estimate DFS sales at Rmb1-1.9bn in 1Q24, and we think per-customer transactions may still be lower than the pre-pandemic level.
Effective cost control. The firm’s operating cost rose 7% YoY but fell 6% QoQ in 1Q24, which was stable amid a substantial recovery in business volume and effective expense control. In 1Q24, the firm’s investment income rose 2% YoY and fell 55% QoQ to Rmb123mn.
Trends to watch
Construction of Phase IV project well underway. According to the Shanghai Planning & Natural Resources Bureau1 and NDRC2, completion of Shanghai Pudong International Airport’s Phase IV expansion project is slated for 2027, which will likely start operation in 2028. The project involves a terminal T3, covering an area of about 852,600 sqm, and will provide a guaranteed airport capacity of 130mn passengers after completion.
Financials and valuation
We maintain our 2024 and 2025 earnings forecasts at Rmb3,306mn and Rmb4,451mn. The stock is trading at 28.3x 2024e and 21.0x 2025e P/E. We maintain an OUTPERFORM rating and our TP of Rmb40, implying 30x 2024e P/E, offering 6% upside.
Risks
Disappointing tourist traffic recovery and/or DFS sales; higher-than- expected capex.