HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

Guangzhou Baiyun Intl Airport (600004 CH): No Abatement in Growth Paces

Beijing Cap Intl Airport (694 HK): Don't Get Too Excited, The Relief Rally Is Excessive

Air China (753 HK): Quietly Catching up Against Peers, Well Set to Outperform in 2021

Air China (753 HK): Thoughts on Cathay Pacific's (293 HK) Massive Re-Capitalisation Proposal

Chinese Airlines: Pair Trade - Long China Southern (1055 HK), Short Air China (753 HK)

Chinese Airlines: The Key Plays on Rmb Appreciation, with China Southern Being the Best

Chinese Airlines: China Southern the Clear Winner in 1H20 - A Must Read Comparison on the Big Three

Chinese Airlines: Jul Traffic Reflects Good Summer Strengths

Equity Bottom-Up

<p>In 2020, we made a good call of "Long <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, short <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a>". Going into 2021, we believe a reversal of such trade, i.e. "Long <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a>, short <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>" will generate more attractive return instead. With CSA outperformed 10.8pp YTD, we see it still not too late to enter into this trade.</p><p>Our strategy is building on four major rationales: 1.) rebound in international traffic, 2.) low comparison base for Air China, 3.) lesser burden from <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>, and 4.) less significant impact of Rmb appreciation. Alternatively, "Long <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>, short <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>" is also a viable trade, but a significantly riskier one.  </p>

In 2020, we made a good call of "Long China Southern Airlines (1055 HK), short Air China Ltd (H) (753 HK)". Going into 2021, we believe a reversal of such trade, i.e. "Long Air China Ltd (H) (753 HK), short China Southern Airlines (1055 HK)" will generate more attractive return instead. With CSA outperformed 10.8pp YTD, we see it still not too late to enter into this trade.Our strategy is building on four major rationales: 1.) rebound in international traffic, 2.) low comparison base for Air China, 3.) lesser burden from Cathay Pacific Airways (293 HK), and 4.) less significant impact of Rmb appreciation. Alternatively, "Long Cathay Pacific Airways (293 HK), short China Southern Airlines (1055 HK)" is also a viable trade, but a significantly riskier one.  

2021 High Conviction: Pair Trade - Long Air China (753 HK), Short China Southern (1055 HK)