HK Stock Market Move | Aviation stocks collectively rise, domestic ticket prices significantly increase, airlines aggressively implement profit management strategies expected to boost performance during peak season.

Aviation stocks collectively rose. As of the time of writing, Air China Limited (00753) rose by 4.58% to HK$5.25; China Southern Airlines (01055) rose by 4.18% to HK$4.24; China Eastern Airlines (00670) rose by 3.16% to HK$2.61; Beijing Capital International Airport (00694) rose by 1.05% to HK$2.88. On the news front, a research report from Guotai Junan pointed out that the recent ticket price recovery has become an industry consensus. Observing the positive changes in airlines' revenue management strategies, domestic ticket prices rose significantly last week compared to the previous week, and the seat occupancy rate slightly decreased, leading to an increase in revenue per seat for the airlines. Considering the significant year-on-year decrease in oil prices, it is estimated that last week's domestic fuel surcharge price rose by more than 20% from the average in December 2023, and airlines are expected to continue to significantly reduce losses year-on-year. The industry expects optimistic supply and demand during the Spring Festival travel season, and active revenue management strategies will boost performance during the peak season, potentially catalyzing optimistic expectations. It is reiterated that the aviation sector has a promising long-term outlook, with the trend of supply and demand recovery expected by 2025. Considering the marketization of ticket prices and the slowdown in fleet growth, the rise in profit center will be initiated. Listed airlines have successively disclosed operating data for November. In November, the industry's passenger load factor decreased by about 2.7 percentage points month-on-month, but was higher than the same period in 2019 by 1.6 percentage points. Shenwan Hongyuan Group pointed out that the aviation sector typically experiences a low season for routine travel in the fourth quarter, but travel demand still remains resilient. Currently, the supply-demand fundamentals of the aviation sector are improving, with stable growth in domestic demand and continuous recovery in international demand. The long-term supply-demand imbalance has a high level of certainty. Oil prices and exchange rates are currently at high levels with significant downward potential. In a relatively optimistic or positive macro environment, pro-cyclical aviation sectors are expected to benefit, and this round of cyclical market trends is likely to start.