Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Thematic (Sector/Industry)

<ul>
<li>We compiled the share price movements of 183 global travel/mobility stocks to uncover general trends and identify rotation and laggard plays   </li>
<li>Tourist countries like Greece, Spain and Turkey did very well. The U.S. also performed well, almost all names closed the year higher except for those with unique problems  </li>
<li>China and anything that is China-focused performed the worst, even companies that delivered great results are not spared and currently trading at cheap valuations </li>
</ul>


We compiled the share price movements of 183 global travel/mobility stocks to uncover general trends and identify rotation and laggard plays   
Tourist countries like Greece, Spain and Turkey did very well. The U.S. also performed well, almost all names closed the year higher except for those with unique problems  
China and anything that is China-focused performed the worst, even companies that delivered great results are not spared and currently trading at cheap valuations 


2023 Winners & Losers: Laggards and Rotation Plays for Global Travel/Mobility Stocks

Equity Bottom-Up

<ul>
<li>IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher</li>
<li>Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value </li>
<li>Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap's attractiveness </li>
</ul>


IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher
Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value 
Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap's attractiveness 


Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

<ul>
<li>
<a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">BOC Aviation (2588 HK)</a> (BOCA) is the highest-quality aircraft leasing company, with a young asset portfolio, quality clientele, cheapest credit facility, and superb risk management.      </li>
<li>Outlook is attractive, strong demand and scarce supply ensures high lease rates and profits. Asset disposals have all recorded a healthy surplus, a potential earnings surprise. </li>
<li>Our TP of HKD70/share implies 0.94x FY24 (22% UPSIDE) potential </li>
</ul>



BOC Aviation (2588 HK) (BOCA) is the highest-quality aircraft leasing company, with a young asset portfolio, quality clientele, cheapest credit facility, and superb risk management.      
Outlook is attractive, strong demand and scarce supply ensures high lease rates and profits. Asset disposals have all recorded a healthy surplus, a potential earnings surprise. 
Our TP of HKD70/share implies 0.94x FY24 (22% UPSIDE) potential 


BOC Aviation (2588 HK, BUY, TP:HKD70): High Quality Safe Bet

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<ul>
<li>Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  </li>
<li>Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside </li>
<li>Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.</li>
</ul>


Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  
Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside 
Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.


SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Among active Global investors, EMEA Industrials are the 6th largest regional sector allocation and the largest in the EMEA region, with a 4.80% holding weight on average.  This allocation places EMEA Industrials as the largest regional sector overweight at +2.05% above benchmark (vs MSCI ACWI) with 72.9% of funds holding more than the benchmark weight.Over the last 6-months, cash flows have been among the highest across all Regional Sector groups, with $1bn in net inflows, more buyers than sellers and a marginal uptick in absolute and relative weights.Over the last 6-months, German Industrials stand out as the key recipient of increased levels of positioning, with 4.2% of funds moving to overweight and 3.4% of funds buying in to the sector.Ownership in <a href="https://www.smartkarma.com/entities/deutsche-post-ag" target="_blank" data-smartkarma-citation="entities:21608:1" rel="noopener">Deutsche Post AG (DPW GR)</a> more than doubled from 9.2% in July 2020 to 20.8% today, with every month in between seeing new funds enter the name.  Key holders are RBC, Artemis and Nuveen, all of whom hold north of a 3% allocation.  Over the last 6-months, no closures were registered and instead 2.9% of funds opened positions, led by Cambriar's Global Equity Fund (1.88%) and John Hancock's Global Equity Fund (1.81%).The analysis looks at the positioning of 380 active Global investors with combined AUM of $1.1tr.

Among active Global investors, EMEA Industrials are the 6th largest regional sector allocation and the largest in the EMEA region, with a 4.80% holding weight on average.  This allocation places EMEA Industrials as the largest regional sector overweight at +2.05% above benchmark (vs MSCI ACWI) with 72.9% of funds holding more than the benchmark weight.Over the last 6-months, cash flows have been among the highest across all Regional Sector groups, with $1bn in net inflows, more buyers than sellers and a marginal uptick in absolute and relative weights.Over the last 6-months, German Industrials stand out as the key recipient of increased levels of positioning, with 4.2% of funds moving to overweight and 3.4% of funds buying in to the sector.Ownership in Deutsche Post AG (DPW GR) more than doubled from 9.2% in July 2020 to 20.8% today, with every month in between seeing new funds enter the name.  Key holders are RBC, Artemis and Nuveen, all of whom hold north of a 3% allocation.  Over the last 6-months, no closures were registered and instead 2.9% of funds opened positions, led by Cambriar's Global Equity Fund (1.88%) and John Hancock's Global Equity Fund (1.81%).The analysis looks at the positioning of 380 active Global investors with combined AUM of $1.1tr.

EMEA Industrials: Global Consensus Overweight

Ireland

AerCap Holdings NV is the world's largest aircraft leasing firm by fleet value, and is listed on the New York Stock Exchange (AER). It has its headquarters in Dublin with offices in Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

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AerCap Holdings NV (AER US)

2023 Winners & Losers: Laggards and Rotation Plays for Global Travel/Mobility Stocks

This report provides a quick peek on the best and worst performers in the world of global aviation and the industries that revolve around it. We...

Mohshin Aziz

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Aircraft shortage & engine issues boost mid-life asset rates. 31% of Aercap's fleet are mid-life assets with renewals within the next 5 years, will...

Mohshin Aziz

BOC Aviation (2588 HK, BUY, TP:HKD70): High Quality Safe Bet

BOC Aviation is a top aircraft leasing company with a young asset portfolio, quality clients, and strong risk management. We think it is a low...

Mohshin Aziz

SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Despite the long timeline restructuring play, there is a good case to be made for investors to use the lull in the share price to jump onto the GE...

Robert Sassoon

EMEA Industrials: Global Consensus Overweight

Over the last 6-months, cash flows into EMEA Industrials have been among the highest across all sectors, with inflows of $1bn, more buyers than...

Steven Holden

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52-week Range

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2023 Winners & Losers: Laggards and Rotation Plays for Global Travel/Mobility Stocks

This report provides a quick peek on the best and worst performers in the world of global aviation and the industries that revolve around it. We...

Mohshin Aziz

Aercap (AER US, BUY, TP:US$81.45): Current Market Value Exceeds Book Value

Aircraft shortage & engine issues boost mid-life asset rates. 31% of Aercap's fleet are mid-life assets with renewals within the next 5 years, will...

Mohshin Aziz

BOC Aviation (2588 HK, BUY, TP:HKD70): High Quality Safe Bet

​BOC Aviation is a top aircraft leasing company with a young asset portfolio, quality clients, and strong risk management. We think it is a low...

Mohshin Aziz

SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Despite the long timeline restructuring play, there is a good case to be made for investors to use the lull in the share price to jump onto the GE...

Robert Sassoon

EMEA Industrials: Global Consensus Overweight

Over the last 6-months, cash flows into EMEA Industrials have been among the highest across all sectors, with inflows of $1bn, more buyers than...

Steven Holden

BOC Aviation is a top aircraft leasing company with a young asset portfolio, quality clients, and strong risk management. We think it is a low...