Spring Airlines continues to impress

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By TESTCustomwebLP TESTCustomwebLP March 24, 2015 20:36

Spring Airlines continues to impress

Spring Airlines, China’s only listed low-cost carrier and Asia’s biggest by market valuation, posted a 20.75% rise in net profit for 2014. Net profit grew to 884.2 million yuan (HK$1.1 billion) last year from 732 million yuan in 2013.Turnover was 7.3 billion yuan, up 11.64%. On the news Spring shares fell 3.79% yesterday to close at 92.28 yuan.

Spring’s market value is now 37 billion yuan – or five times the value of AirAsia – Is that realistic? It may well be – Spring Japan is due to begin services in May 2015 and more international subsidiaries are set to follow if all goes well. Guidance for Spring stock is now settling in the 130 yuan range for year end 2015 – that is astonishing share price growth by any measure.

Forecast earnings are expected to grow 35% to 1.19 billion yuan for 2015 and a further 43.5% to 1.7 billion yuan for 2016. Spring carried 11.4m passengers in 2014 with an average load factor of 93.07%. Ancillary revenue reached an impressive 36 yuan per passenger and resulted in a profit contribution of 130m yuan for 2014.

Spring really is the Ryanair of China. It plans to double its fleet to 100 aircraft by 2018 (20% annual increases). Spring currently operates a fleet of 51 A320s serving more than 100 routes in Asia. Given the level of demand, the main worry for Spring will be expanding fast enough to meet demand while it still has an edge over other Chinese carriers. This means it may need to bring aircraft into the fleet faster than was anticipated only 12-24 months ago therefore Spring needs lessor help!

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By TESTCustomwebLP TESTCustomwebLP March 24, 2015 20:36