Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

Hainan Meilan International Airport / Equity Bottom-Up

<ul>
<li>A slew of bad news from weak China consumption, depreciating RMB to negative progress in an arbitration sent Meilan Airport stock down to below book value.</li>
<li>Yet when it comes to the fundamental of the company itself, we believe concerns are over-blown and very much priced in.</li>
<li>Meilan Airport is the most under-valued major airport in China airport space in our view. Patience will pay off.</li>
</ul>


A slew of bad news from weak China consumption, depreciating RMB to negative progress in an arbitration sent Meilan Airport stock down to below book value.
Yet when it comes to the fundamental of the company itself, we believe concerns are over-blown and very much priced in.
Meilan Airport is the most under-valued major airport in China airport space in our view. Patience will pay off.


Meilan Airport (357 HK): Positive on The Only China Airport Trading Below Book Value

<ul>
<li>Meilan Airport is both a strategic asset and a key beneficiary in China’s blueprint for Hainan. The hub holds an indispensable yet underappreciated position in Hainan’s DFS market.</li>
<li>While jump in depreciation and plunging passenger traffic in 2022 dealt heavy blow to the company, they also pave the way for a strong turnaround as re-opening revives travel demand.</li>
<li>We expect the company’s net profit to reach RMB600 million in 2023 and further double to RMB1.2 billion by 2025, driving share price to double in three years.</li>
</ul>


Meilan Airport is both a strategic asset and a key beneficiary in China’s blueprint for Hainan. The hub holds an indispensable yet underappreciated position in Hainan’s DFS market.
While jump in depreciation and plunging passenger traffic in 2022 dealt heavy blow to the company, they also pave the way for a strong turnaround as re-opening revives travel demand.
We expect the company’s net profit to reach RMB600 million in 2023 and further double to RMB1.2 billion by 2025, driving share price to double in three years.


Meilan Airport (357 HK): A Strategic Asset to Ride on Hainan DFS Investment Theme

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Thematic (Sector/Industry)

<ul>
<li>Chinese airports have turnaround with Xiamen, Guangzhou, and Shanghai airports reported 9M23 profits. The others (Beijing, Shenzhen, Hainan) are still lossmaking, but should turnaround soon   </li>
<li>The upcoming Winter/Spring schedule reveals international capacity at 70% of 2019's level, a catalyst for strong earnings growth, as international flights generate &gt;2.5x higher revenues   </li>
<li>
<a href="https://www.smartkarma.com/entities/xiamen-international-air-a" target="_blank" data-smartkarma-citation="entities:18544:1" rel="noopener">Xiamen International Air A (600897 CH)</a> exhibits the best value; <a href="https://www.smartkarma.com/entities/shanghai-international-airport-co-ltd" target="_blank" data-smartkarma-citation="entities:6511:1" rel="noopener">Shanghai International Airport (600009 CH)</a> is the most appealing due to its size and liquidity </li>
</ul>


Chinese airports have turnaround with Xiamen, Guangzhou, and Shanghai airports reported 9M23 profits. The others (Beijing, Shenzhen, Hainan) are still lossmaking, but should turnaround soon   
The upcoming Winter/Spring schedule reveals international capacity at 70% of 2019's level, a catalyst for strong earnings growth, as international flights generate &gt;2.5x higher revenues   

Xiamen International Air A (600897 CH) exhibits the best value; Shanghai International Airport (600009 CH) is the most appealing due to its size and liquidity 


Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

Podcast by Magellan Asset Management, Magellan Asset Management

MAGELLAN - IN THE KNOW

Podcast by Magellan Asset Management

Magellan Asset Management

‘In The Know’ is a new monthly investment podcast brought to you by Magellan Asset Management, one of Australia’s leading global equities investors. We seek to bring you timely, unique and thought-provoking insights to help you make sense of today’s investment landscape. From deep dives into the latest macroeconomic and geopolitical issues, to our analysis on sectors and stocks on global markets. Join Magellan, as they connect with a myriad of experts in their field, including CEOs of stocks we hold, global leaders and consultants in finance, investing, risk and politics, and key members of our investment team and business. ‘In The Know’ - a monthly podcast from Magellan is worth investing your time in! Magellan - Experts in global investing.

<ul>
<li>Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers</li>
<li>Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand</li>
<li>Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors</li>
</ul>
<p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.</em></p>


Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers
Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand
Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Lessons Learnt from Investing in Essential Services

<ul>
<li>1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.</li>
<li>We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.</li>
<li>While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.</li>
</ul>


1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.
We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.
While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.


Meilan Airport (357 HK): Not Out of the Woods Yet

China

Hainan Meilan International Airport Company Limited provides airfield services, terminal facilities, ground handling services, passenger and cargo handling services. The Company also leases commercial and retail space at the Meilan Airport, operates airport-related business franchising, advertising, car parking, tourism services, and sells duty-free and consumable goods.

Hainan Meilan International Airport (357 HK)

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Hainan Meilan International Airport (357 HK)

Meilan Airport (357 HK): Positive on The Only China Airport Trading Below Book Value

50% market cap wiped off left Meilan Airport as the only China airport trading below book value. We believe the airport's fundamentals are not as...

Eric Chen

Meilan Airport (357 HK): A Strategic Asset to Ride on Hainan DFS Investment Theme

As a strategic asset, Meilan airport is an indispensable yet underappreciated play on Hainan DFS investment theme. We see 100% upside in return as...

Eric Chen

Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...

Mohshin Aziz

Lessons Learnt from Investing in Essential Services

The podcast explores the benefits of investing in infrastructure assets for reliable long-term cash flows and opportunities for growth.

MAGELLAN - IN THE KNOW

Meilan Airport (357 HK): Not Out of the Woods Yet

1H23 results suggests slow recovery in duty free sales and elevated cost base will continue pressuring its bottom line and profitability probably...

Eric Chen

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Meilan Airport (357 HK): Positive on The Only China Airport Trading Below Book Value

50% market cap wiped off left Meilan Airport as the only China airport trading below book value. We believe the airport's fundamentals are not as...

Eric Chen

Meilan Airport (357 HK): A Strategic Asset to Ride on Hainan DFS Investment Theme

As a strategic asset, Meilan airport is an indispensable yet underappreciated play on Hainan DFS investment theme. We see 100% upside in return as...

Eric Chen

Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

​Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...

Mohshin Aziz

Lessons Learnt from Investing in Essential Services

The podcast explores the benefits of investing in infrastructure assets for reliable long-term cash flows and opportunities for growth.

MAGELLAN - IN THE KNOW

Meilan Airport (357 HK): Not Out of the Woods Yet

1H23 results suggests slow recovery in duty free sales and elevated cost base will continue pressuring its bottom line and profitability probably...

Eric Chen

Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...