A Hundred Billion White Horse Stalled: The "Five Year Pain" Of Shanghai Airport

"The tax-free bonus of Pudong airport was difficult to sustain before." When Shen Shujun, chairman of Shanghai airport, made such remarks at the performance presentation meeting, investors' hearts were cooled.

Indeed, in the past three months, the only 100 billion airport white horse stock of this A-share has "changed face", and its share price has been falling continuously, from the highest of 81.42 yuan to 46.35 yuan on May 14, and the latest market value has fallen below 90 billion yuan. Some people say that this is the "disaster" of Shanghai airport; However, some people said that the collapse will be "buy point".

But when will this "buying point" appear? But few people can come to a conclusion.

In September 2020, Jia Ruijun, who has worked as the chairman of the board of directors of Shanghai airport for eight years, resigned due to job transfer. Under his administration, the net profit of Shanghai airport doubled in the past five years, and the scale of its revenue also exceeded 10 billion yuan.

The improvement of fundamentals has made the valuation of Shanghai airport go up. In August 2019, the company's share price broke through the 88 yuan mark, with a market value of more than 160 billion yuan. Some organizations even call out a target price of 102 yuan, saying that they can "build nests to attract Phoenix" and share the dividend of overseas consumption return.

This is due to the tax-free channel at Shanghai airport. The 21st century economic reporter noticed that a great event happened during Jia Ruijun's term of office. In September 2018, he witnessed the birth of a contract to create China's tax-free history with Chen Guoqiang, general manager of China immune group and chairman of Japan Shanghai. Shanghai airport signed the contract for transfer of operation right of duty-free shop project of Shanghai Pudong International Airport with nissho Shanghai. The contract is expected to bring a total of 41 billion yuan of guaranteed sales commission for Shanghai airport in seven years from 2019.

However, it is this contract that has become the fuse for the decline of Shanghai airport's valuation.

Affected by the epidemic situation and the changes in the pattern of duty-free industry, the tax-free income of Shanghai airport has not reached the "seven-year itch", but it has received "five-year pain"“（ Shanghai Airport) short term earnings expectations are bound to fall. " An analyst who didn't want to be named told the 21st century economic report that the tax-free and bad news so far this year has shaken the investment logic of the secondary market for Shanghai airport. "Now the industry generally believes that 2025 may be the time point for the real restoration of Shanghai airport fundamentals."

A shaken agreement

The time goes back to January 29 this year. After the close of the day, Shanghai airport announced an agreement "fried pot".

The "supplementary agreement on signing the contract for the transfer of operation right of duty-free shop project" changes the mode of taking the higher minimum guarantee and sales sharing in the tax-free contract signed between Shanghai airport and Japan Shanghai in 2018. It is changed to "when the international passenger flow is less than 80% of the flow in 2019, the sales share will be taken; When the international passenger flow is less than 80% in 2019, the minimum is taken. "

In the tax-free contract in 2018, the tax-free income of Shanghai airport is directly linked to the free sales volume in Shanghai. The detailed rules are as follows: when the actual sales commission of the current month is greater than or equal to the monthly minimum sales commission, the monthly paid in expenses = the monthly actual sales commission; When the actual sales commission of the current month is less than the monthly minimum sales commission, the monthly actual charge = the monthly minimum sales commission.

"According to the past cooperation between the company and Japan Shanghai, the performance rate of relevant contracts in Japan Shanghai is 100%, and the enterprise has a high degree of integrity," the Shanghai airport said However, the 21st century economic reporter noted that there are also statements in the contract: "due to the influence of unpredictable or force majeure factors in the actual performance of the contract, some or all of the contents of the contract may not be performed or terminated."

Perhaps no one at that time took this statement to heart. Until the beginning of 2020, when the new crown pneumonia epidemic suddenly hit, "force majeure" really happened.

In the new agreement, the tax-free income of Shanghai airport is only linked with international passenger flow, which directly shakes the foundation of tax-free income.

In the past five years, the continuous growth of Shanghai airport performance is closely related to tax-free income.

According to financial data, from 2017 to 2019, Shanghai airport realized 8.062 billion yuan, 9.313 billion yuan and 10.945 billion yuan respectively, with an average annual growth rate of more than 15%; The net profits attributable to shareholders of listed companies were 3.683 billion yuan, 4.231 billion yuan and 5.030 billion yuan, with an average annual growth rate of more than 10%.

Among them, the non aviation revenue of Shanghai airport is the main driving force of its performance growth. Especially in 2019, when the revenue exceeds 10 billion yuan, the non aviation income of the company is 6.861 billion yuan, accounting for 62.68%.

The commercial, office leasing and check-in counters are collectively referred to as non aviation business in Shanghai airport. Under this classification, the main body of its non aviation income is commercial catering income. In 2019, the company's commercial catering revenue was 5.463 billion yuan, accounting for 49.91% of the total revenue, an increase of 7.11% compared with that in 2018.

In response to this change, the company said: "the smooth implementation of the" Shanghai Pudong International Airport duty-free shop project management right transfer contract "has also had a positive impact on the growth of relevant revenue."

As a matter of fact, in 2019, the tax-free business income of Shanghai will exceed the expectation.

According to the data, the tax-free contract between the two parties in 2019 was performed normally, and the recognized revenue was 3.788 billion yuan, which was 263 million yuan higher than the expected amount.

"When the tax-free contract was signed in 2018, the number of flights taking off and landing at Shanghai airport and the passenger throughput increased year by year. The huge flow has become the core reason why both sides agree to tax-free minimum The aforementioned analysts told the 21st century economic report that before the epidemic, the industry generally predicted that the number of aircraft taking off and landing at Shanghai airport in 2025 would be 653000 and the passenger throughput would be more than 80 million. Under the expectation of year-on-year growth, the tax-free minimum income would be increased by more than 8 billion yuan this year.

"However, it is now expected that the traffic at Shanghai airport will return to the level of 2019 before the epidemic by 2025." The analyst further added.

Statistics show that in 2019, the passenger throughput of Pudong Airport, the main business of Shanghai airport, will be 76.0975 million, and the number of aircraft take-off and landing will be 511900.

Shanghai airport encounters "five years of pain"

For Shanghai airport, the travel situation of domestic tourists during the May Day golden week is an important moment for the recovery of the domestic civil aviation industry in the post epidemic era. As early as the "May Day" golden week came, the industry believed that it would become the busiest "May Day" holiday in history. Forecast data on passenger throughput of Shanghai airport have also emerged one after another: "during the May 1" period, the daily average number of domestic passenger flights at Shanghai Pudong Airport will reach 1000, an increase of 36% compared with the same period in 2019; The average daily passenger throughput in China will reach 141000, an increase of 29% over the same period in 2019.

One noteworthy detail is that in order to promote consumption compensation and potential release, Shanghai has held the "May 5 Shopping Festival" since 2020 to drive consumption recovery. In this year's "May 5 Shopping Festival", Pudong Airport, the main business of Shanghai airport, has joined hands with CITS, China Eastern Airlines wallet and other famous stores to join the festival since May 1.

The outside world regards this action as a self-help measure to stimulate passenger consumption at Shanghai airport. But the secondary market did not respond enthusiastically“ Within three trading days after the May Day holiday, the share price of Shanghai airport fell again and broke through 44 yuan on May 10, breaking a new two-year low.

The short-term recovery is difficult to move the capital market, and the Shanghai airport is facing difficulties.

In fact, the recovery does exist, but compared with other major airports in China, Shanghai airport is not outstanding.

Taking the transportation situation in March as an example, the company took off and landed 35600 sorties, handled 3.4834 million passengers, and handled 380400 tons of cargo and mail. Compared with Baiyun Airport and Shenzhen airport, which are listed in A-share market, Shanghai airport has higher take-off and landing sorties than Shenzhen airport and lower than Baiyun Airport; Passenger throughput is lower than the other two airports.

In terms of passenger flow, the advantage of Shanghai airport is not prominent. After excluding tax-free income, it seems that Shanghai airport, which has returned to the role of infrastructure, can hardly sustain its current market value. As of May 14, the market value of Shanghai airport, Baiyun Airport and Shenzhen Airport were 87.7 billion yuan, 28.3 billion yuan and 16.7 billion yuan respectively.

The 21st century economic reporter has noticed that the shrinkage of international passenger throughput is the main factor in reducing the passenger throughput of Shanghai airport.

Compared with March 2019 before the epidemic, the domestic passenger throughput of Shanghai airport has increased: in March 2019, the number was 3.085 million, compared with 3.3677 million in the same period of this year. The change of this data represents that Shanghai airport plays an important role in China's civil aviation industry.

However, the delayed improvement of overseas epidemic situation will continue to suppress the recovery of international passenger throughput of Shanghai airport, which is like breaking the "arm" of Shanghai airport.

When will the civil aviation industry fully recover? This has almost become the first question investors ask for when they re-examine the value of Shanghai airport.

There is no lack of industry forecasts on this point in time. Mayur Patel, Asia director of OAG, a global flight data provider, previously said that due to repeated outbreaks, the full recovery of air travel in Asia is likely to be 2025, rather than 2024, as previously predicted by the company.

Coincidentally, the last year of the duty-free contract of Shanghai airport is 2025. Under this expectation, it is difficult for the tax-free income of Shanghai airport to break out in these five years.

In the first quarter of this year, Shanghai airport lost 436 million yuan. When asked by investors whether the profit and loss balance can be achieved this year, Shen Shujun said: "at present, the epidemic situation is still the biggest uncertain factor affecting the recovery and development of the industry. The overseas epidemic situation is still grim and complex, and the local epidemic situation is sporadic. For a long time in the future, the pressure of" foreign defense input, internal defense rebound, and people together prevention "will still be great."

According to the forecast previously released by Pudong Airport, 438000 aircraft take-off and landing will be realized this year, and the passenger throughput will be 42 million.

These figures are only comparable to those in 2010.