Founder of Antler Capital

Stanley Tsai, CFA

Equity Bottom-Up

<p><strong>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> </strong></p>
<p>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.</p>
<p><strong>BOCAVI is a highly geared play on the resumption of air travel. </strong>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.</p>
<p><strong>Management's countercyclical capex expansion increasingly looks like a shrewd bet. </strong>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.  </p>
<p><strong>We expect the firm's undiscounted committed revenues to top USD20bn in 2021.</strong> 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. </p>
<p><strong>We are buyers at book value.</strong> 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.</p>
<p>Attachment: BOCAVI Financial Summary</p>

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

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Market dynamics remain largely positive and there continues to be an absence of breakdowns across all Sectors and the major averages. As a result, we continue to see a mixed market environment, but we remain constructive overall with the S&amp;P 500 holding above short-term support at the 50-day moving average and 4056.</p>

Market dynamics remain largely positive and there continues to be an absence of breakdowns across all Sectors and the major averages. As a result, we continue to see a mixed market environment, but we remain constructive overall with the S&amp;P 500 holding above short-term support at the 50-day moving average and 4056.

U.S. Equity Strategy: Growth Improving, But Can It Last?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. </p><p>When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. </p><p>My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.</p><p>Which is a lot.</p><p>The arithmetic, and an explanation of why it matters, follow.</p>

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

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

Thematic (Sector/Industry)

<div>The vaccine announcement by <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> and <a href="https://www.smartkarma.com/entities/moderna-inc" target="_blank" data-smartkarma-citation="entities:28744:1" rel="noopener">Moderna Inc (MRNA US), </a>
</div>
<div>the laggard Singapore equities market all of a sudden leaped to joy and pushed travel-related names up, playing catch up with the rest of the world.</div>
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<div>
<a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">Singapore Airlines (SIA SP)</a> and <a href="https://www.smartkarma.com/entities/sats-ltd" target="_blank" data-smartkarma-citation="entities:19962:1" rel="noopener">SATS Ltd (SATS SP)</a> are the go-to stock for Singapore’s reopening air travel that started with the travel bubble with Hong Kong and other low-risk countries to follow. <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a>  is the key beneficiary to the reopening of the Singapore economy, through the switching of work-from-home to work-in-office (higher ridership in the MRTs and buses that contributes to 60% of the company’s revenues), and also from the reopening of the restaurants and malls that increases mobility in the country. The low or non-existent community COVID-19 cases also help to boost the confidence in Comfort Delgro.</div>
<div></div>
<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/615/original/image_5285658631606463283499.png?1606463282" class="editor-image img-responsive" data-smartkarma-image-id="174615"></figure>
<div class="content-remarks">
<p>source: Capital IQ</p>
</div>
<p>The trade is to buy ComfortDelgro as it has less risk to the increase in pandemic and less exposure to the cross border travel unlike Singapore Airlines and SATS (whose valuations have run ahead despite the ongoing concern of the industry) that has most of their revenues exposed to the risk of the cross border travel.</p>
</div>

The vaccine announcement by Pfizer Inc (PFE US) and Moderna Inc (MRNA US), 

the laggard Singapore equities market all of a sudden leaped to joy and pushed travel-related names up, playing catch up with the rest of the world.


Singapore Airlines (SIA SP) and SATS Ltd (SATS SP) are the go-to stock for Singapore’s reopening air travel that started with the travel bubble with Hong Kong and other low-risk countries to follow. Comfortdelgro Corp (CD SP)  is the key beneficiary to the reopening of the Singapore economy, through the switching of work-from-home to work-in-office (higher ridership in the MRTs and buses that contributes to 60% of the company’s revenues), and also from the reopening of the restaurants and malls that increases mobility in the country. The low or non-existent community COVID-19 cases also help to boost the confidence in Comfort Delgro.




source: Capital IQ

The trade is to buy ComfortDelgro as it has less risk to the increase in pandemic and less exposure to the cross border travel unlike Singapore Airlines and SATS (whose valuations have run ahead despite the ongoing concern of the industry) that has most of their revenues exposed to the risk of the cross border travel.


2021 High Conviction: Singapore Travel Names in Bumpy Recovery

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<div><p>So much for a slow week...lot of online advertising newsflow we wanted to comment on.</p></div><div><div><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div></div></div>

So much for a slow week...lot of online advertising newsflow we wanted to comment on.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

TMT (Mid) Weekly: 3 Things that Stood Out: Twitter, FB>Google, and TikTok

United States

United Airlines Holdings Inc is an airline holding company.  The Company owns and operates airlines that transports persons, property and mail throughout the United States and abroad.

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United Airlines Holdings (UAL US)

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

U.S. Equity Strategy: Growth Improving, But Can It Last?

We continue to see a mixed market environment, but we remain constructive overall with the S&P 500 holding above short-term support at the 50-day...

Vermilion Research

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

2021 High Conviction: Singapore Travel Names in Bumpy Recovery

Long ComfortDelgro as it has less risk to the increase in pandemic unlike Singapore Airlines and SATS (whose valuations have run ahead despite the...

Henry Soediarko

TMT (Mid) Weekly: 3 Things that Stood Out: Twitter, FB>Google, and TikTok

So much for a slow week...lot of online advertising newsflow we wanted to comment on.Obex’s fundamental research process is focused on secular...

Aaron Gabin

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