HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<p>We think that share price of <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> has yet to reflect the prospects of recovering international passenger traffic in FY22, despite its 15pp outperformance against the HSCEI YTD. There are news lately on plans to reopen borders by many overseas countries including the US and Australia. It is also speculated that China will do so as well in early 2022 after its vaccination rate hit 85%, vs. 78% currently.</p><p>Its passenger traffic in Sep has recovered MoM when compared with the local case impacted Aug. Meanwhile, cargo stayed resilient and it will also benefit from the strength in airfreight rate. We think Air China should be appreciated for its capacity management as it has not aggressively expanded capacity despite YoY traffic rebound. This is evidenced by a flat passenger load factor and a 2.7pp expansion in cargo load factor for 9M21.  </p>

We think that share price of Air China Ltd (H) (753 HK) has yet to reflect the prospects of recovering international passenger traffic in FY22, despite its 15pp outperformance against the HSCEI YTD. There are news lately on plans to reopen borders by many overseas countries including the US and Australia. It is also speculated that China will do so as well in early 2022 after its vaccination rate hit 85%, vs. 78% currently.Its passenger traffic in Sep has recovered MoM when compared with the local case impacted Aug. Meanwhile, cargo stayed resilient and it will also benefit from the strength in airfreight rate. We think Air China should be appreciated for its capacity management as it has not aggressively expanded capacity despite YoY traffic rebound. This is evidenced by a flat passenger load factor and a 2.7pp expansion in cargo load factor for 9M21.  

Cathay Pacific Airways / Equity Bottom-Up

<ul>
<li>With more foreign countries being granted visa-free visits to China, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> will benefit from more transfer traffic via Hong Kong.</li>
<li>Recovery is decent with passenger traffic rising 37.5% in 5M24. CX's capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. </li>
<li>YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  </li>
</ul>


With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
Recovery is decent with passenger traffic rising 37.5% in 5M24. CX's capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  


Cathay Pacific (293 HK): Multiple Positive Developments

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>Growth of outbound Chinese travel demand strong in May as HK, Macau slow</li>
<li>Domestic travel demand also showed solid growth in May and early June</li>
<li>Trip.com appears reasonably cheap now that it's dipped below US$50, BUY</li>
</ul>


Growth of outbound Chinese travel demand strong in May as HK, Macau slow
Domestic travel demand also showed solid growth in May and early June
Trip.com appears reasonably cheap now that it's dipped below US$50, BUY


Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Atour Lifestyle Holdings / Equity Capital Markets

<ul>
<li>Legend Capital (LC), one of the principal shareholders of <a href="https://www.smartkarma.com/entities/atour-lifestyle-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33481:1" rel="noopener">Atour Lifestyle Holdings (ATAT US)</a>, is looking to raise around US$168m through a secondary selldown.</li>
<li>This will be the third selldown by Legend Capital in just over a year’s time. Hence, the deal is well flagged.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>


Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a secondary selldown.
This will be the third selldown by Legend Capital in just over a year’s time. Hence, the deal is well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.


Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

<ul>
<li>Q124 showed solid top-line growth, impressive improvement in core margins</li>
<li>We are not too concerned about moderating domestic hotel, air pricing</li>
<li>After consensus EPS raised, TCOM a BUY below US$50 per ADS, in our view</li>
</ul>


Q124 showed solid top-line growth, impressive improvement in core margins
We are not too concerned about moderating domestic hotel, air pricing
After consensus EPS raised, TCOM a BUY below US$50 per ADS, in our view


Trip.com Q124 Review: Solid Top-Line Growth | Progress on Margins | BUY Below US$50

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Southern Airlines (1055 HK)

Air China (753 HK): Come Fly with Me

Air China is well positioned to gain from increase in overseas border openings. Also, China's possible removal of quarantine requirements for...

Osbert Tang, CFA

Cathay Pacific (293 HK): Multiple Positive Developments

As more countries gain visa-free access to China, CX will benefit from increased transfer traffic. CX's recovery is on track with passenger...

Osbert Tang, CFA

Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

May outbound Chinese travel demand was strong, apparently driven by tourists shifting flying outside the Asian region. Domestic demand growth also...

Tracking Traffic

Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a...

Sumeet Singh

Trip.com Q124 Review: Solid Top-Line Growth | Progress on Margins | BUY Below US$50

Trip.com's Q124 earnings results showed solid top-ine growth and strong core margin improvement. We believe the company's ADSs are attractive below...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Air China (753 HK): Come Fly with Me

Air China is well positioned to gain from increase in overseas border openings. Also, China's possible removal of quarantine requirements for...

Osbert Tang, CFA

Cathay Pacific (293 HK): Multiple Positive Developments

​As more countries gain visa-free access to China, CX will benefit from increased transfer traffic. CX's recovery is on track with passenger...

Osbert Tang, CFA

Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

May outbound Chinese travel demand was strong, apparently driven by tourists shifting flying outside the Asian region. Domestic demand growth also...

Tracking Traffic

Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a...

Sumeet Singh

Trip.com Q124 Review: Solid Top-Line Growth | Progress on Margins | BUY Below US$50

Trip.com's Q124 earnings results showed solid top-ine growth and strong core margin improvement. We believe the company's ADSs are attractive below...

Tracking Traffic

As more countries gain visa-free access to China, CX will benefit from increased transfer traffic. CX's recovery is on track with passenger...