Shenwan Hongyuan Group: Chinese freight carriers have a competitive advantage in the current supply and demand situation. We recommend focusing on Eastern Air Logistics (601156.SH).

Shenwan Hongyuan Group issued a research report stating that under the background of global route network restructuring, Chinese cargo airlines have the following advantages: 1) Distance advantage, can fly over Russian airspace, lower unit cost compared to European and American airlines that need to detour; 2) Demand advantage, China is the world's largest cross-border e-commerce exporter, providing stable demand support for air cargo; 3) Capacity advantage, if European and American airlines exit some Eurasian routes due to cost pressures, Chinese airlines are expected to fill the gap and increase their global market share. With the background of stable timeliness demand for air cargo, air freight rates have achieved a phased increase, and Chinese cargo airlines, with their own advantages, are expected to become the main beneficiaries in this round of mismatch between supply and demand in the air cargo market. Focus on domestic air cargo airlines, and particularly recommend Eastern Air Logistics (601156.SH) and pay attention to Air China Cargo (001391.SZ). Shenwan Hongyuan Group's main points are as follows: Event: Recently, the International Air Transport Association (IATA) released the global air cargo market data for April 2026. Global air cargo total demand (CTK) increased by 4.0% year-on-year in April 2026 compared to April 2025, with international demand increasing by 4.0%. Capacity (ACTK) decreased by 0.4% year-on-year, with international capacity decreasing by 0.9%. Against the backdrop of the ongoing disruptions in the Middle East affecting the global route network, the air cargo industry continues its steady expansion, and the "demand expansion + capacity reduction" scissor gap pattern is accelerating, leading to simultaneous increases in quantity and price, highlighting the industry's resilience. Supply constraints are tightening, reshaping the global route network by restricting Middle Eastern airspace. The situation in the Middle East has led to the disruption of operations at major hubs in the Gulf region, with Middle Eastern airlines experiencing a significant decline of 22.9% in capacity and 18.2% in demand year-on-year in April, the weakest performance globally. Freight volumes on Europe-Middle East and Middle East-Asia routes decreased by -25.9% and -22.4% year-on-year, respectively. Foreign airlines are forced to detour to avoid the Gulf airspace, resulting in longer flight distances, lower aircraft utilization rates, and slow recovery of wide-body passenger aircraft belly capacity. With global effective capacity unlikely to be quickly replenished in the short term, the supply-demand gap persists. Demand resilience exceeds expectations, with quantity and price rising together, leading Asia-Pacific and Europe-Asia routes. By region, Asia-Pacific airlines saw a 10.5% year-on-year increase in April freight demand, with a 5.3% year-on-year increase in capacity, the highest growth among all regions globally. By route, Europe-Asia freight volumes saw a year-on-year increase of 16.2%, marking 38 consecutive months of growth; intra-Asia routes saw a 13.0% year-on-year increase, marking 30 consecutive months of growth; Asia-North America routes saw an 8.3% year-on-year increase, marking 6 consecutive months of growth. Trade flows related to Asia have become the core driver supporting global air cargo, with air freight price indexes also showing positive trends: the Baltic air freight price index for April increased by 22.6% year-on-year; the Shanghai Pudong export air freight price index increased by 24.8% year-on-year, and by 16.5% since the beginning of the year; the Hong Kong export air freight price index increased by 25.4% year-on-year, and by 11.8% since the beginning of the year. Cost pressures persist, but pricing and profit elasticity remain. In April, air fuel prices surged by 121.1% year-on-year, while crude oil prices increased by 77.7% year-on-year, resulting in significant cost pressures. However, with the "demand expansion + capacity reduction" scissor gap, the global freight load factor increased by 1.9 percentage points year-on-year to 46.0%, keeping air freight prices high. Moreover, the incremental cargo volumes in this round are mainly contributed by dedicated freighters, and with constrained capacity supply, the elasticity of prices is expected to further open up. Risk warning: Macroeconomic performance falling below expectations; uncertain risks related to international trade policies; aviation safety concerns, etc.