Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a> will deliver record profit in 2023 on strong passenger and rising cargo rates</li>
<li>Beyond 2023, hard to forecast due to high exposure (~30%) to volatile cargo, and it lacks brand recognition and customer loyalty evidenced by its weaker yields to local rival   </li>
<li>Target price of TWD23 based on 1.71x FY2024 P/BV ratio - one SD above mean. Limited 6% UPSIDE, with 3,9% dividend yield. Prefer <a href="https://www.smartkarma.com/entities/eva-airways-corp" target="_blank" data-smartkarma-citation="entities:20645:1" rel="noopener">Eva Airways (2618 TT)</a> </li>
</ul>



China Airlines (2610 TT) will deliver record profit in 2023 on strong passenger and rising cargo rates
Beyond 2023, hard to forecast due to high exposure (~30%) to volatile cargo, and it lacks brand recognition and customer loyalty evidenced by its weaker yields to local rival   
Target price of TWD23 based on 1.71x FY2024 P/BV ratio - one SD above mean. Limited 6% UPSIDE, with 3,9% dividend yield. Prefer Eva Airways (2618 TT) 


China Airlines (2610 TT, NEUTRAL, TP:TWD 23.00): Superb 2023 Masks Upcoming Challenges

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Several US customs brokers have been suspended under new, tighter rules</li>
<li>The new rules could make 'de minimis' imports slightly more difficult</li>
<li>Whether it lists in London or NYC, additional rule changes could threaten SHEIN</li>
</ul>


Several US customs brokers have been suspended under new, tighter rules
The new rules could make 'de minimis' imports slightly more difficult
Whether it lists in London or NYC, additional rule changes could threaten SHEIN


SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

Thematic (Sector/Industry)

<ul>
<li>In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. </li>
<li>Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. </li>
<li>Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. </li>
</ul>


In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. 
Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. 
Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. 


China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

<ul>
<li>Jet fuel price has declined in the past two months and is 20% lower than the September peak. Positive for airlines but we have yet to see any earnings upgrade   </li>
<li>All the Chines state carriers (Air China, China Eastern and China Southern) and Taiwan's EVA Airways are unhedged, benefiting the most from this lower fuel price trend </li>
<li>Worst off due to fuel hedge cover at higher than current market prices are Qantas Airways (75% hedged), Air New Zealand (54% hedged) and Japan Airlines (40% hedged)  </li>
</ul>


Jet fuel price has declined in the past two months and is 20% lower than the September peak. Positive for airlines but we have yet to see any earnings upgrade   
All the Chines state carriers (Air China, China Eastern and China Southern) and Taiwan's EVA Airways are unhedged, benefiting the most from this lower fuel price trend 
Worst off due to fuel hedge cover at higher than current market prices are Qantas Airways (75% hedged), Air New Zealand (54% hedged) and Japan Airlines (40% hedged)  


Lower Fuel Price, Which Asia Pacific Airline Benefits and Suffers the Most?

Equity Capital Markets

<ul>
<li>For first time since 2022, carriers' cargo revenue, yield, load factor all rising</li>
<li>Asia outbound, US inbound air cargo tons both improving in early 2024</li>
<li>SHEIN, Temu could account for 40%+ of US inbound air tons from CH, HK, TW</li>
</ul>


For first time since 2022, carriers' cargo revenue, yield, load factor all rising
Asia outbound, US inbound air cargo tons both improving in early 2024
SHEIN, Temu could account for 40%+ of US inbound air tons from CH, HK, TW


Growth of SHEIN, Temu Appears to Be Boosting Asia-US Air Cargo Volume & Pricing

Taiwan

China Airlines Limited provides scheduled international air transportation for passengers and cargo freight throughout cities in Europe, America, Asia, and Australia.

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China Airlines (2610 TT)