CICC: Maintaining China Innovation Airlines (03931) Outperforming the Industry Rating and Lowering the Company's Target Price to HK$30.5
The Zhitong Finance App learned that CICC released a research report stating that it kept China Innovation Airlines (03931)'s 2026/2027 profit forecast unchanged at 27.02/3.64 billion yuan. Due to a downward shift in the valuation center of Hong Kong stocks and sectors, the bank lowered the company's target price by 32.2% to HK$30.5. The current stock price corresponds to 10.3x/7.5x P/E in 2026/2027, and the target price corresponds to 17.2x/12.5x P/E in 2026/2027, with 68.04% upside to maintain the outperforming industry rating.
CICC's main views are as follows:
1H26 results are in line with market expectations
The company announced 1H26 results: revenue of 27.084 billion yuan, +65.0% year on month, -3.2% month on month; net profit to mother of 935 million yuan, +100.7% year on year and -7.4% month on month; the company's 1H26 performance was in line with expectations.
Lithium battery 1H26 shipments increased year-on-year, and unit profit bucked the trend and improved month-on-month
The company's 1H26 lithium battery shipments were about 65 GWh, an increase of 44.1%. By business, power battery shipments were about 38-39 GWh, an increase of 59-60%, mainly benefiting from: 1) the increase in passenger car stock customer share and the release of new customer orders. The company 1H26 continued to receive new models from old customers such as Xiaopeng, Huawei Hongmeng Smart, Zero Sport, etc. At the same time, the newly designated high-end series of Xiaomi Pengcheng models also gradually entered mass production; 2) Commercial vehicle customer shipments increased by +225% compared to the same period; 2) Commercial vehicle customer shipments increased by +225% compared to the same period. Type full coverage. Energy storage battery shipments were 26.6 GWh, an increase of 25-30% over the previous year, mainly due to production capacity. 1H's energy storage is basically at full capacity. In terms of profit, the bank estimates the net profit per unit of 1H lithium batteries (excluding profit and loss for minority shareholders) of 0.023 yuan/Wh. Against the backdrop of rising prices for midstream and upstream materials, profits bucked the trend, mainly benefiting from price transmission and the continued release of scale effects.
Accelerate overseas layout, and the sales structure is expected to welcome positive changes in 26-27
In terms of power batteries, the company's passenger cars have surpassed customers such as Hyundai, Toyota, and Volkswagen, and commercial vehicles have been designated by leading European and American customers. The bank expects orders to be gradually released in 26-27, and 1H26's overseas installed capacity will also increase by 86%. In terms of energy storage batteries, the company has successively broken through energy storage orders in Eastern Europe/Northern Europe/East Asia in 25 years, and the bank expects direct exports to reach a 0-1 breakthrough in '26.
The cost rate continued to decline during the period, and the inventory size increased
Benefiting from the rapid increase in the company's revenue scale, the company's operating leverage continued to be released. The total cost rate during the 1H26 period was 9.9%, down 2.9 ppt year on year and 1.3 ppt month on month. As of 1H26, the company's inventory size was 12.83 billion yuan, a significant increase from the end of '25. It was mainly due to price increases for midstream and upstream raw materials, and the company strengthened inventory reserves.
Risk warning: China's demand for new energy vehicles falls short of expectations, global demand for energy storage falls short of expectations, raw material prices fluctuate greatly, and market competition intensifies.