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

Equity Bottom-Up

Shanghai International Airport / Equity Bottom-Up

<ul>
<li>Chinese airports are enjoying a steady passenger traffic growth of 5% YTD; Shenzhen and Shanghai airports are growing much faster.  </li>
<li>Shanghai International Airport (600009 CH)is our top pick given its size, liquidity, strong balance sheet, and its strong earnings growth potential.  </li>
<li>Our target price for <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 CNY44, pegged to global airport peer average FY25 EV/EBITDA of 12x.   </li>
</ul>


Chinese airports are enjoying a steady passenger traffic growth of 5% YTD; Shenzhen and Shanghai airports are growing much faster.  
Shanghai International Airport (600009 CH)is our top pick given its size, liquidity, strong balance sheet, and its strong earnings growth potential.  
Our target price for Shanghai International Airport (600009 CH) is CNY44, pegged to global airport peer average FY25 EV/EBITDA of 12x.   


Shanghai International Airport (600009 CH | BUY | TP:CNY44): Slow but Steady Earnings Recovery

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


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

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Travelsky Technology Ltd H / Equity Bottom-Up

H1 2021 number of flights processed in China has shown signs of healthy recovery but due to the recent Delta Variant spread in China, <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> share price alongside the other travel-related names have been sold off. Furthermore, excerpts from an Instagram update provides some colour of the current state of air travel situation in the Chinese airport. 
The short-term recommendation is to stay away from <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> as the Delta variant has caused the negative sentiment on airline-related stocks to soar again as shown in the chart below.
Taking into account a more optimistic view that the higher vaccination rates in China and that it is working effectively against the current and future variant, therefore, air travel volume should recover, sooner rather than later, the company should benefit from the recovery thus for long-term investors, this is a stock that you can and should average down.
For investors who are to have exposure to <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> , this is probably the right time to start building exposure.

H1 2021 number of flights processed in China has shown signs of healthy recovery but due to the recent Delta Variant spread in China, Travelsky Technology Ltd H (696 HK) share price alongside the other travel-related names have been sold off. Furthermore, excerpts from an Instagram update provides some colour of the current state of air travel situation in the Chinese airport. 
The short-term recommendation is to stay away from Travelsky Technology Ltd H (696 HK) as the Delta variant has caused the negative sentiment on airline-related stocks to soar again as shown in the chart below.
Taking into account a more optimistic view that the higher vaccination rates in China and that it is working effectively against the current and future variant, therefore, air travel volume should recover, sooner rather than later, the company should benefit from the recovery thus for long-term investors, this is a stock that you can and should average down.
For investors who are to have exposure to Travelsky Technology Ltd H (696 HK) , this is probably the right time to start building exposure. 

Founder of Antler Capital

Stanley Tsai, CFA

BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> 
As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

China

Shenzhen Airport Co., Ltd. provides airport terminal ground passenger transportation and cargo delivery services.  The Company also leases airport lounge, designs and publishes advertisements, and offers air ticket agency services.

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Shenzhen Airport Co Ltd A (000089 CH)

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

Shanghai International Airport (600009 CH | BUY | TP:CNY44): Slow but Steady Earnings Recovery

Chinese airports are enjoying steady passenger traffic growth and a good proxy for travel recovery. Our top pick among the six listed Chinese...

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

Travelsky (696): Maintain Positive Stand

An optimistic view that with the higher vaccination rates in China and is working effectively against the current and future variant, air travel...

Henry Soediarko

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Shanghai International Airport (600009 CH | BUY | TP:CNY44): Slow but Steady Earnings Recovery

​Chinese airports are enjoying steady passenger traffic growth and a good proxy for travel recovery. Our top pick among the six listed Chinese...

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

Travelsky (696): Maintain Positive Stand

An optimistic view that with the higher vaccination rates in China and is working effectively against the current and future variant, air travel...

Henry Soediarko

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

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

Chinese airports are enjoying steady passenger traffic growth and a good proxy for travel recovery. Our top pick among the six listed Chinese...