Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<strong><a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a></strong> dangles bonuses for pilots and first officers amid Hong Kong's stringent crew quarantine requirements. </li>
<li>Preceding my comments on Cathay - and <strong><a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a></strong>- are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
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Cathay Pacific Airways (293 HK) dangles bonuses for pilots and first officers amid Hong Kong's stringent crew quarantine requirements. 
Preceding my comments on Cathay - and Swire Pacific (A) (19 HK)- are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Cathay Pacific - Still Grounded

<ul>
<li>In its latest traffic figure <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1117/2021111700289.pdf" target="_blank" rel="noopener">release</a>, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific (293 HK)</a> said it's been able to achieve close to operating cash breakeven for the four-month period from July to October 2021.</li>
<li>Cathay carried a total of 76,430 passengers in October, an increase of 98.3% compared to October 2020, but a 97.2% decrease compared to the pre-pandemic level in October 2019.</li>
<li>Separately, <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s discount to NAV of ~50% is bang in line with its 12-month average.</li>
</ul>


In its latest traffic figure release, Cathay Pacific (293 HK) said it's been able to achieve close to operating cash breakeven for the four-month period from July to October 2021.
Cathay carried a total of 76,430 passengers in October, an increase of 98.3% compared to October 2020, but a 97.2% decrease compared to the pre-pandemic level in October 2019.
Separately, Swire Pacific (A) (19 HK)'s discount to NAV of ~50% is bang in line with its 12-month average.


Swire Pac (19 HK): Cathay's Operating Cash (Almost) Breaking Even

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Tourism Group Duty Free Corp Ltd / Equity Bottom-Up

<p>In this year, <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> (CDFC) has been affected by the on-and-off scattered local COVID-19 cases that negatively impacted duty free sales. The outbreak in Jiangsu, Henan and Hunan in Aug has impaired the traditional peak summer season for the company. However, we see some recent developments to be relatively positive, and we updated our earnings expectations for CDFC which still projects phenomenal growth in next two years. </p><p>Lately, six of its subsidiaries in Hainan have confirmed to enjoy preferential tax rate of 15% starting 1 Jan 2020, and the retrospective impact will be reflected in 3Q21, and such positive tax benefits will continue until FY24. Also, the negative impact of tourists arrival in Aug seems to be less adverse than expected. And finally, initial Golden Week sales figures for Hainan duty free showed an increase of 75% YoY in the first five days, and this is an encouraging sign of the pick-up in CDFC's business momentum. </p>

In this year, China Tourism Group Duty Free Corp Ltd (601888 CH) (CDFC) has been affected by the on-and-off scattered local COVID-19 cases that negatively impacted duty free sales. The outbreak in Jiangsu, Henan and Hunan in Aug has impaired the traditional peak summer season for the company. However, we see some recent developments to be relatively positive, and we updated our earnings expectations for CDFC which still projects phenomenal growth in next two years. Lately, six of its subsidiaries in Hainan have confirmed to enjoy preferential tax rate of 15% starting 1 Jan 2020, and the retrospective impact will be reflected in 3Q21, and such positive tax benefits will continue until FY24. Also, the negative impact of tourists arrival in Aug seems to be less adverse than expected. And finally, initial Golden Week sales figures for Hainan duty free showed an increase of 75% YoY in the first five days, and this is an encouraging sign of the pick-up in CDFC's business momentum. 

CTG Duty Free (601888 CH): Latest Updates - Taxes, Tourists & Golden Week

Last Week in Event SPACE:  Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> has gained 78% from its low at the end of October last year, compared to 13% for <a href="https://www.smartkarma.com/entities/swire-properties-ltd" target="_blank" data-smartkarma-citation="entities:5775:1" rel="noopener">Swire Properties (1972 HK)</a> and 20% for the HSI.</p>
<p>Swire's NAV discount has been narrower in the past, but it's questionable how much reliance can be placed on historical data.</p>
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<p>Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Swire Pacific (A) (19 HK) has gained 78% from its low at the end of October last year, compared to 13% for Swire Properties (1972 HK) and 20% for the HSI.
Swire's NAV discount has been narrower in the past, but it's questionable how much reliance can be placed on historical data.



Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



Hong Kong

Swire Properties Limited develops and manages commercial, retail, and residential properties. The Company's investment portfolio includes office and retail premises, and serviced apartments and other residential accommodation.

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Swire Properties (1972 HK)

StubWorld: Cathay Pacific - Still Grounded

I can't get excited with Cathay. I tilt bullish on Swire Pac. Around a 50% discount is wide given its tendency to historically trade in the low-to...

David Blennerhassett

Swire Pac (19 HK): Cathay's Operating Cash (Almost) Breaking Even

I tilt bullish on Swire Pac. Around a 50% discount is wide given its tendency to historically trade in the low-to-mid twenties. I'm still not...

David Blennerhassett

CTG Duty Free (601888 CH): Latest Updates - Taxes, Tourists & Golden Week

CDFC has a tough Aug due to the local COVID-19 cases, but recent news flow including lower tax rates, less serious decline in tourists arrivals and...

Osbert Tang, CFA

Last Week in Event SPACE: Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: Swire Pac's Outperformance

A 34% discount to NAV for Swire Pac compares to the low-to-mid twenties historically. But that was before the protests and COVID. I believe there...

David Blennerhassett

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