Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>"Pent-Up demand"? No signs of it anywhere in outbound or domestic metrics</li>
<li>Sluggish outbound demand, capacity trajectories continued to lag in November</li>
<li>YTD share performance weak, mirrors disappointing recovery in travel activity</li>
</ul>


"Pent-Up demand"? No signs of it anywhere in outbound or domestic metrics
Sluggish outbound demand, capacity trajectories continued to lag in November
YTD share performance weak, mirrors disappointing recovery in travel activity


Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

InterGlobe Aviation Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/interglobe-aviation-ltd" target="_blank" data-smartkarma-citation="entities:24877:1" rel="noopener">InterGlobe Aviation Ltd (INDIGO IN)</a> (Indigo) has turnaround and is on path to achieve record profits in FY2024 on strong demand, stable FX and lower jet fuel prices </li>
<li>However, engine problems will hurt capacity deployment in 4QFY24 and FY2025, and the engine manufacturer has been very vague and unreliable in presenting its remedial plans </li>
<li>Share price near all-time high and valuations (PE, EV/EBITDAR) are expensive compared to global LCCs. TP of INR2,513 (14% DOWNSIDE) pegged to 15x FY2025 PE (top-end LCC cycle)  </li>
</ul>



InterGlobe Aviation Ltd (INDIGO IN) (Indigo) has turnaround and is on path to achieve record profits in FY2024 on strong demand, stable FX and lower jet fuel prices 
However, engine problems will hurt capacity deployment in 4QFY24 and FY2025, and the engine manufacturer has been very vague and unreliable in presenting its remedial plans 
Share price near all-time high and valuations (PE, EV/EBITDAR) are expensive compared to global LCCs. TP of INR2,513 (14% DOWNSIDE) pegged to 15x FY2025 PE (top-end LCC cycle)  


Interglobe Aviation (INDIGO IN | SELL | TP: INR2,513): Not Worth a King's Ransom

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fedex-corp" target="_blank" data-smartkarma-citation="entities:14577:1" rel="noopener">FedEx Corp (FDX US)</a> (FedEx) will release its 2QFY24 results on 19 Dec after market close. Closely watched as it is the bellwether for global trade and commerce  </li>
<li>Cost reduction initiatives has delivered, and resurgence in e-commerce activities across Asia Pacific could potentially provide positive earnings surprise    </li>
<li>Target price US$299 (7% UPSIDE) based on 15x CY2024 PE (FedEx's historical mean). Our recommendation is to give FedEx a miss, too little upside for the risk </li>
</ul>



FedEx Corp (FDX US) (FedEx) will release its 2QFY24 results on 19 Dec after market close. Closely watched as it is the bellwether for global trade and commerce  
Cost reduction initiatives has delivered, and resurgence in e-commerce activities across Asia Pacific could potentially provide positive earnings surprise    
Target price US$299 (7% UPSIDE) based on 15x CY2024 PE (FedEx's historical mean). Our recommendation is to give FedEx a miss, too little upside for the risk 


FedEx (FDX US, BUY, TP:$299): 2QFY24 Will Shed Light on E-Commerce Resurgence

Thematic (Sector/Industry)

<ul>
<li>In early December 2022, Chinese authorities relaxed many Covid-19 restrictions</li>
<li>A year in, the recovery in Chinese tourism activity has disappointed, so far</li>
<li>Similarly, most Chinese tourism stocks have performed poorly over the last year</li>
</ul>


In early December 2022, Chinese authorities relaxed many Covid-19 restrictions
A year in, the recovery in Chinese tourism activity has disappointed, so far
Similarly, most Chinese tourism stocks have performed poorly over the last year


12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> (JAL) is making a positive recovery on strong domestic and international demand</li>
<li>Weak JPY is a big headwind and so is its 40% fuel hedge cover locked in at higher than-market price. These factors should reverse and unwind next year </li>
<li>Target price JPY3,150 based on 1.65x FY24 P/BV - one standard deviation above its mean. Borderline attractive with 12% UPSIDE, and 2.3% dividend yield  </li>
</ul>



Japan Airlines (9201 JP) (JAL) is making a positive recovery on strong domestic and international demand
Weak JPY is a big headwind and so is its 40% fuel hedge cover locked in at higher than-market price. These factors should reverse and unwind next year 
Target price JPY3,150 based on 1.65x FY24 P/BV - one standard deviation above its mean. Borderline attractive with 12% UPSIDE, and 2.3% dividend yield  


Japan Airlines (9201 JP, BUY, TP: JPY3150): Slow, Steady, Stable Recovery

Singapore

Singapore Airlines Limited provides air transportation, engineering, pilot training, air charter, and tour wholesaling services. The Company's airline operation covers Asia, Europe, the Americas, South West Pacific, and Africa.

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Singapore Airlines (SIA SP)

Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

November outbound data were disappointing, and even domestic travel activity metrics appeared to move in the wrong direction. Not surprisingly,...

Tracking Traffic

Interglobe Aviation (INDIGO IN | SELL | TP: INR2,513): Not Worth a King's Ransom

Indigo has turnaround is forecasted to deliver record FY2024. But major engine issues will impact FY2025 capacity deployment and the uncertainties...

Mohshin Aziz

FedEx (FDX US, BUY, TP:$299): 2QFY24 Will Shed Light on E-Commerce Resurgence

FedEx's 2QFY24 results will be released on Dec 19. The company's cost reduction efforts have been successful, and a boost in e-commerce in Asia...

Mohshin Aziz

12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

A year after most of China's pandemic-related travel restrictions were eased, we look back at the recovery in Chinese tourism activity in 2023.

Tracking Traffic

Japan Airlines (9201 JP, BUY, TP: JPY3150): Slow, Steady, Stable Recovery

Japan Airlines is recovering with steady domestic and international demand despite headwinds from a weak JPY against the USD. the company is...

Mohshin Aziz

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

November outbound data were disappointing, and even domestic travel activity metrics appeared to move in the wrong direction. Not surprisingly,...

Tracking Traffic

Interglobe Aviation (INDIGO IN | SELL | TP: INR2,513): Not Worth a King's Ransom

​Indigo has turnaround is forecasted to deliver record FY2024. But major engine issues will impact FY2025 capacity deployment and the uncertainties...

Mohshin Aziz

FedEx (FDX US, BUY, TP:$299): 2QFY24 Will Shed Light on E-Commerce Resurgence

​FedEx's 2QFY24 results will be released on Dec 19. The company's cost reduction efforts have been successful, and a boost in e-commerce in Asia...

Mohshin Aziz

12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

A year after most of China's pandemic-related travel restrictions were eased, we look back at the recovery in Chinese tourism activity in 2023.

Tracking Traffic

Japan Airlines (9201 JP, BUY, TP: JPY3150): Slow, Steady, Stable Recovery

​Japan Airlines is recovering with steady domestic and international demand despite headwinds from a weak JPY against the USD. the company is...

Mohshin Aziz

Indigo has turnaround is forecasted to deliver record FY2024. But major engine issues will impact FY2025 capacity deployment and the uncertainties...

FedEx's 2QFY24 results will be released on Dec 19. The company's cost reduction efforts have been successful, and a boost in e-commerce in Asia...

Japan Airlines is recovering with steady domestic and international demand despite headwinds from a weak JPY against the USD. the company is...