HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a> expects a sharp 87.5-92.5% reduction in its losses in 1H22, driven primarily by significant revival in its Club Med business, though China is weak.</li>
<li>Outlook for 2H22 looks very encouraging as booking figures indicate good YoY volume growth and double-digit rate improvement in EMEA and Americas. </li>
<li>China also witnessed solid rebound in Jul and Aug after removal of lockdowns in 2Q22. New Club Med Joyview resorts including Changbaishan and Qiandaohu are added contributors. </li>
</ul>



Fosun Tourism (1992 HK) expects a sharp 87.5-92.5% reduction in its losses in 1H22, driven primarily by significant revival in its Club Med business, though China is weak.
Outlook for 2H22 looks very encouraging as booking figures indicate good YoY volume growth and double-digit rate improvement in EMEA and Americas. 
China also witnessed solid rebound in Jul and Aug after removal of lockdowns in 2Q22. New Club Med Joyview resorts including Changbaishan and Qiandaohu are added contributors. 


Fosun Tourism (1992 HK): Positive Profit Alert and Improving Outlook Guidances

Equity Capital Markets

China Tourism Group Duty Free Corp Ltd / Equity Capital Markets

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<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. </li>
<li>While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.</li>
<li>We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. </li>
</ul>



China Tourism Group Duty Free Corp Ltd (601888 CH) has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. 
While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.
We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. 


CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

<ul>
<li>Given significant presence in China, <a href="https://www.smartkarma.com/entities/shangri-la-asia-ltd" target="_blank" data-smartkarma-citation="entities:19690:1" rel="noopener">Shangri-La Asia (69 HK)</a> is geared towards China's more accommodative COVID policy. The good thing is that the share price has not yet reflected this. </li>
<li>Over the next 12-18 months, SLA will first benefit from tourism recovery outside of China, and then followed by powerful rebound in China's inbound travelers, particularly the high-end business visitors.</li>
<li>The resurgence in long-absented business visitors should bring in higher room yield and F&amp;B revenue. It has minimal refinancing and liquidity risks and these make its near-trough 0/48x P/B unjustified. </li>
</ul>


Given significant presence in China, Shangri-La Asia (69 HK) is geared towards China's more accommodative COVID policy. The good thing is that the share price has not yet reflected this. 
Over the next 12-18 months, SLA will first benefit from tourism recovery outside of China, and then followed by powerful rebound in China's inbound travelers, particularly the high-end business visitors.
The resurgence in long-absented business visitors should bring in higher room yield and F&amp;B revenue. It has minimal refinancing and liquidity risks and these make its near-trough 0/48x P/B unjustified. 


Shangri-La Asia (69 HK): Let's Go, What Are You Waiting For?

China Southern Airlines / Equity Bottom-Up

<ul>
<li>While China Southern Airlines (1055 HK) saw passenger traffic up 17.3% in Jan, this is at the expense of higher capacity, leading to a 1.8pp YoY passenger load contraction. </li>
<li>Its cargo traffic underperformed both CEA and Air China with a YoY decline; and this is disappointing in a period of time where airfreight rate is at record-breaking level.  </li>
<li>We see reduced local travel demand, higher operating costs, weaker cargo business, pressure on yield and higher base of comparison key challenges in 2022, and prefer Air China Ltd (753 HK). </li>
</ul>


While China Southern Airlines (1055 HK) saw passenger traffic up 17.3% in Jan, this is at the expense of higher capacity, leading to a 1.8pp YoY passenger load contraction. 
Its cargo traffic underperformed both CEA and Air China with a YoY decline; and this is disappointing in a period of time where airfreight rate is at record-breaking level.  
We see reduced local travel demand, higher operating costs, weaker cargo business, pressure on yield and higher base of comparison key challenges in 2022, and prefer Air China Ltd (753 HK). 


China Southern Airlines (1055 HK): A Tough Start

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

Beijing Capital International Airport (BCIA)

<ul>
<li>We think there should not be much positive effect on <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> from Winter Olympics and Paralympics. We expect near-term downside pressure on share price.</li>
<li>Higher operating costs, revenue waivers and tighter traffic control are likely to impair the profitability in next year, as evidenced by the precedent case in the 2008 Beijing Olympics. </li>
<li>While share price has been weak YTD, BCIA is likely to sustain losses into FY22, meaning further book value erosion. That said, even at 0.83x P/B, there is minimal upside.</li>
</ul>


We think there should not be much positive effect on Beijing Capital International Airport (BCIA) (694 HK) from Winter Olympics and Paralympics. We expect near-term downside pressure on share price.
Higher operating costs, revenue waivers and tighter traffic control are likely to impair the profitability in next year, as evidenced by the precedent case in the 2008 Beijing Olympics. 
While share price has been weak YTD, BCIA is likely to sustain losses into FY22, meaning further book value erosion. That said, even at 0.83x P/B, there is minimal upside.


Beijing Capital Intl Airport (694 HK): Don't Bet on the Winter Olympics

China

Guangzhou Baiyun International Airport Co., Ltd. operates the Guangzhou Baiyun International Airport and provides related transportation services, including ground, passenger, storage, airplane maintenance and repair, and other services.  The Company also provides food, space rental, and advertising services.

Guangzhou Baiyun International Airport (600004 CH)

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Guangzhou Baiyun International Airport (600004 CH)

Fosun Tourism (1992 HK): Positive Profit Alert and Improving Outlook Guidances

Not only that Fosun Tourism has an improving 1H22 performance, its outlook for 2H22 is also promising as evidenced by solid forward booking, better...

Osbert Tang, CFA

Shangri-La Asia (69 HK): Let's Go, What Are You Waiting For?

Shangri-La Asia has benefited from China's domestic tourism recovery, and we expect this will be followed by better tourist flow outside of China...

Osbert Tang, CFA

China Southern Airlines (1055 HK): A Tough Start

CSA has a tough start for 2022 as reflected in weak Jan load and cargo performance. We see many challenges brewing in this year and expect the...

Osbert Tang, CFA

Beijing Capital Intl Airport (694 HK): Don't Bet on the Winter Olympics

We expect BCIA's traffic and cost to be negatively, rather than positively, affected by the Winter Olympics and Paralympics to be held in Feb and...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fosun Tourism (1992 HK): Positive Profit Alert and Improving Outlook Guidances

Not only that Fosun Tourism has an improving 1H22 performance, its outlook for 2H22 is also promising as evidenced by solid forward booking, better...

Osbert Tang, CFA

CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

CDFC re-activated its H-share IPO by refreshing its Application Proof. If the issue details are unchanged, it is less attractive than previously...

Osbert Tang, CFA

Shangri-La Asia (69 HK): Let's Go, What Are You Waiting For?

Shangri-La Asia has benefited from China's domestic tourism recovery, and we expect this will be followed by better tourist flow outside of China...

Osbert Tang, CFA

China Southern Airlines (1055 HK): A Tough Start

CSA has a tough start for 2022 as reflected in weak Jan load and cargo performance. We see many challenges brewing in this year and expect the...

Osbert Tang, CFA

Beijing Capital Intl Airport (694 HK): Don't Bet on the Winter Olympics

We expect BCIA's traffic and cost to be negatively, rather than positively, affected by the Winter Olympics and Paralympics to be held in Feb and...

Osbert Tang, CFA