HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Beijing Capital International Airport (BCIA) / Equity Bottom-Up

Beijing Capital International Airport (BCIA)

<p><a href="https://www.smartkarma.com/entities/beijing-capital-international-airport-bcia" target="_blank" data-smartkarma-citation="entities:10626:1" rel="noopener">Beijing Capital International Airport (BCIA) (694 HK)</a> staged a 45% relief rally since Nov on several piece of good news and more optimistic expectations, but we see such move as excessive. Its 12-month forward P/B multiple has hence moved back to 1.03x, about the level before the pandemic. This is clearly difficult to justify given the challenges it will face in the next two years.</p><p>The traffic diversion to Beijing Daxing International Airport, slow recovery of international traffic and heavy reliance of duty free on international routes will make BCIA difficult to return to its FY19 profit level in FY22, but the share price is now reflecting this scenario. We find this unrealistic and believe there is significant downside risk. It is also interesting to note that average short volume in Dec has picked up to 23%, compared with just 10% in Nov.</p>

Beijing Capital International Airport (BCIA) (694 HK) staged a 45% relief rally since Nov on several piece of good news and more optimistic expectations, but we see such move as excessive. Its 12-month forward P/B multiple has hence moved back to 1.03x, about the level before the pandemic. This is clearly difficult to justify given the challenges it will face in the next two years.The traffic diversion to Beijing Daxing International Airport, slow recovery of international traffic and heavy reliance of duty free on international routes will make BCIA difficult to return to its FY19 profit level in FY22, but the share price is now reflecting this scenario. We find this unrealistic and believe there is significant downside risk. It is also interesting to note that average short volume in Dec has picked up to 23%, compared with just 10% in Nov.

Beijing Cap Intl Airport (694 HK): Don't Get Too Excited, The Relief Rally Is Excessive

China

Guangzhou Baiyun Electric Equipment Company Limited develops, manufactures and sells high and low voltage switchgears and control equipment. The Company's main products include high and low voltage switchgears, gas-insulated metal-enclosed switchgears, and other related products.

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Guangzhou Baiyun Electric-A (603861 CH)

Beijing Cap Intl Airport (694 HK): Don't Get Too Excited, The Relief Rally Is Excessive

BCIA's 45% relief rally in less than 2 months is excessive, as P/B already returned to pre-pandemic level. Share price is expecting profit to...

Osbert Tang, CFA

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