HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Guangzhou Baiyun International Airport / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/guangzhou-baiyun-international-airport" target="_blank" data-smartkarma-citation="entities:10819:1" rel="noopener">Guangzhou Baiyun International Airport (600004 CH)</a> achieved the least YoY decline in aircraft movement and cargo throughput in Dec, ending a rough year on a sweet note. In particular, domestic aircraft movement soared 21.8% and international cargo traffic rose 4.8% in last month, which are both very encouraging paces. GBIA's heavy domestic exposure - 87.7% of total aircraft movement and 94.1% of total passenger throughput - should provide a favourable traffic comparison base for 1Q21 given the domestic market was the hardest hit in 1Q20. The relatively fewer scattered local cases in southern China, for example, only 1 in Guangdong since Jun 2020, will likely mean the region is a better travel option in the upcoming month-long Winter Break, and this should be positive to GBIA.

Guangzhou Baiyun International Airport (600004 CH) achieved the least YoY decline in aircraft movement and cargo throughput in Dec, ending a rough year on a sweet note. In particular, domestic aircraft movement soared 21.8% and international cargo traffic rose 4.8% in last month, which are both very encouraging paces. GBIA's heavy domestic exposure - 87.7% of total aircraft movement and 94.1% of total passenger throughput - should provide a favourable traffic comparison base for 1Q21 given the domestic market was the hardest hit in 1Q20. The relatively fewer scattered local cases in southern China, for example, only 1 in Guangdong since Jun 2020, will likely mean the region is a better travel option in the upcoming month-long Winter Break, and this should be positive to GBIA. 

Guangzhou Baiyun Intl Airport (600004 CH): Concluding 2020 with a Sweet Note

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/973/original/BANNER-TourDec20.png?1608779882" class="editor-image img-responsive" data-smartkarma-image-id="179973"></figure></section>Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a>.

Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like Trip.com (TCOM US).

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

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On December 26th, Beijing’s municipal government responded to a fresh outbreak of Covid19 by ordering residents to stay at home during the upcoming Lunar New Year (LNY) holiday. LNY falls on February 12th next year, barely six weeks from now.  
The bad news out of Beijing highlights an important risk to Chinese travel-related companies: that yet another important holiday period could effectively be lost to Covid19. If the restrictions put in place by local authorities in Beijing extend to other large cities or provinces, it could push back a recovery in Chinese travel demand until Summer 2021 or even Golden Week, in October 2021.
In this note we explain why LNY travel matters, and why we now believe normal levels of LNY travel may again be lost in 2021. We also point to the example of Macau, which continues to see sub-par tourism demand five months after it eased travel restrictions for some Chinese visitors.




On December 26th, Beijing’s municipal government responded to a fresh outbreak of Covid19 by ordering residents to stay at home during the upcoming Lunar New Year (LNY) holiday. LNY falls on February 12th next year, barely six weeks from now.  
The bad news out of Beijing highlights an important risk to Chinese travel-related companies: that yet another important holiday period could effectively be lost to Covid19. If the restrictions put in place by local authorities in Beijing extend to other large cities or provinces, it could push back a recovery in Chinese travel demand until Summer 2021 or even Golden Week, in October 2021.
In this note we explain why LNY travel matters, and why we now believe normal levels of LNY travel may again be lost in 2021. We also point to the example of Macau, which continues to see sub-par tourism demand five months after it eased travel restrictions for some Chinese visitors.

Dreams Deferred: Looks Like Lunar New Year Travel Demand May Be Lost

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Travelsky Technology Ltd H / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> remains the de-facto SaaS play in the Chinese domestic airlines' industry that is proven by the higher ROE and lower debt level compared to the airlines in general. Volumes have recovered post the worse COVID-19 period thanks to the decisive government policy and as of October 2020, the YoY variance has narrowed to -1.3% compared to -46.7% in May 2020, further reinforcing the investment thesis that domestic travel that makes up to 85% of the group's business is recovering on the right direction. 
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Investors should treat <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> as an ETF to get exposure to the air travel recovery in China without the hassle of picking which airlines to buy.
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Travelsky Technology Ltd H (696 HK) remains the de-facto SaaS play in the Chinese domestic airlines' industry that is proven by the higher ROE and lower debt level compared to the airlines in general. Volumes have recovered post the worse COVID-19 period thanks to the decisive government policy and as of October 2020, the YoY variance has narrowed to -1.3% compared to -46.7% in May 2020, further reinforcing the investment thesis that domestic travel that makes up to 85% of the group's business is recovering on the right direction. 

Investors should treat Travelsky Technology Ltd H (696 HK) as an ETF to get exposure to the air travel recovery in China without the hassle of picking which airlines to buy.


Travelsky (696): Muted Impact from New Virus

Thematic (Sector/Industry)

We see the joint announcement by five ministries/departments on the development of postal and express industry in the Guangdong-Hong Kong-Macau Greater Bay Area has positive implications on many of the logistics operators in China in the medium to long term. The supporting initiatives range from the strengthening of the strategic hubs of Guangzhou and Shenzhen airports to encouraging more industry consolidations.While many companies are expected to benefit from these GBA postal and express policies, we highlight some of the most important ones in this Insight - <a href="https://www.smartkarma.com/entities/guangzhou-baiyun-international-airport" target="_blank" data-smartkarma-citation="entities:10819:1" rel="noopener">Guangzhou Baiyun International Airport (600004 CH)</a> (GBIA) and <a href="https://www.smartkarma.com/entities/shenzhen-airport-co-ltd" target="_blank" data-smartkarma-citation="entities:15522:1" rel="noopener">Shenzhen Airport Co A (000089 CH)</a>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a>, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-intl-holdings" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen Intl (152 HK)</a> and <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>.

We see the joint announcement by five ministries/departments on the development of postal and express industry in the Guangdong-Hong Kong-Macau Greater Bay Area has positive implications on many of the logistics operators in China in the medium to long term. The supporting initiatives range from the strengthening of the strategic hubs of Guangzhou and Shenzhen airports to encouraging more industry consolidations.While many companies are expected to benefit from these GBA postal and express policies, we highlight some of the most important ones in this Insight - Guangzhou Baiyun International Airport (600004 CH) (GBIA) and Shenzhen Airport Co A (000089 CH), China Southern Airlines (1055 HK), Sinotrans (598 HK), Kerry Logistics Network (636 HK), Shenzhen Intl (152 HK) and S.F. Holding (002352 CH).

China Logistics: Key Beneficiaries of China's Greater Bay Area Postal and Express Development

China

China Southern Airlines Company Limited provides commercial airline services throughout China, Southeast Asia and other parts of the world.  The Company also provides other airline related services including aircraft maintenance and air catering.

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China Southern Airlines (1055 HK)

Guangzhou Baiyun Intl Airport (600004 CH): Concluding 2020 with a Sweet Note

Ending 2020 with good traffic in Dec, we expect a favourable traffic comparison base in 1Q21 than its peers. Its location also means that it will...

Osbert Tang, CFA

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

It appears the nascent recovery in Chinese domestic tourism activity began to stall in November. Outbound travel activity remains dormant, and even...

Tracking Traffic

Dreams Deferred: Looks Like Lunar New Year Travel Demand May Be Lost

We now believe there is a better than even chance that much of the Chinese travel demand normally associated with LNY will be lost in 2021.

Tracking Traffic

Travelsky (696): Muted Impact from New Virus

Travelsky Technology Ltd H (696 HK) is comparable to an ETF for investors who want to get exposure to the air travel recovery in China without...

Henry Soediarko

China Logistics: Key Beneficiaries of China's Greater Bay Area Postal and Express Development

China's support of postal and express industry development in the Greater Bay Area has positive implications on many logistics companies. We...

Osbert Tang, CFA

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