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Caixin Global

Articles from Caixin Global

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Thematic (Sector/Industry)

<ul>
<li>Stock investors have warmed to China’s tourism industry when the government made a surprise announcement to cut the amount of time arriving overseas travellers have to spend in quarantine.</li>
<li>The surge in share prices reflects some newfound optimism in an industry that has been battered by the pandemic</li>
<li>In a press release that same day, the State Council forbade local governments from stopping people from crossing regional borders into their jurisdiction or forcing them to quarantine for no good reason</li>
</ul>


Stock investors have warmed to China’s tourism industry when the government made a surprise announcement to cut the amount of time arriving overseas travellers have to spend in quarantine.
The surge in share prices reflects some newfound optimism in an industry that has been battered by the pandemic
In a press release that same day, the State Council forbade local governments from stopping people from crossing regional borders into their jurisdiction or forcing them to quarantine for no good reason


Chinese Travel Industry Stocks Take Off After Quarantine Rule Change

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<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

Shanghai International Airport / Equity Bottom-Up

<ul>
<li>We consider the acquisitions of Hongqiao and related assets at a price tag of Rmb19.1bn as both financially fair for and strategically beneficial to <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>.</li>
<li>The 12.13pp increase in stake by the parent company is a vote of support and confidence, and the acquisitions trimmed its 1H21 loss by 29.8% and lowered LPS by 42.1%.</li>
<li>Profit guarantee for Logistics Company and Advertising Segment by the parent for FY22-24 is very welcomed and translated into undemanding acquisition PERs of 12.8x and 10.2x for FY24F.</li>
</ul>


We consider the acquisitions of Hongqiao and related assets at a price tag of Rmb19.1bn as both financially fair for and strategically beneficial to Shanghai International Airport (600009 CH).
The 12.13pp increase in stake by the parent company is a vote of support and confidence, and the acquisitions trimmed its 1H21 loss by 29.8% and lowered LPS by 42.1%.
Profit guarantee for Logistics Company and Advertising Segment by the parent for FY22-24 is very welcomed and translated into undemanding acquisition PERs of 12.8x and 10.2x for FY24F.


Shanghai International Airport (600009 CH): Hongqiao Acquisitions Are Fair Deals

China

Shanghai International Airport Co., Ltd. operates Pudong Airport and Hongquiao airport in Shanghai.   The Company provides a full range of services including air traffic control, terminal management, cargo handling, advertising, space rental, and other related services.

Shanghai International Airport (600009 CH)

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Shanghai International Airport (600009 CH)

Chinese Travel Industry Stocks Take Off After Quarantine Rule Change

Stock investors have warmed to China’s tourism industry when the government made a surprise announcement to cut the amount of time arriving...

Caixin Global

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

Shanghai International Airport (600009 CH): Hongqiao Acquisitions Are Fair Deals

The acquisitions of Hongqiao and related assets will enhance bottom line in next two years. The parent's profit guarantees and increase in stake...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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