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.

Chinese Airlines: Domestic Market Gets a Little Challenging in the Near Term, How to Play It?

China Southern Airlines (1055 HK): Facing Stronger Headwinds

Chinese Airlines: Initial FY20 Results Suggest Tough Market Has Already Begun

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

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

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

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

Equity Bottom-Up

<p>While <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> (CSA) is still showing the best traffic performance in absolute level, the Nov traffic showed that <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> has started to pick up its momentum. We believe the three important things to note are: 1.) Air China recording the least retreat in passenger traffic momentum MoM, 2.) Air China has the least drop in passenger load factor MoM, and 3.) Air China gathering cargo momentum.</p><p>Since Nov, Air China has outperformed CSA by 10pp, and we see good possibility for this trend to continue into 2021, hence our <a href="https://www.smartkarma.com/insights/2021-high-conviction-pair-trade-long-air-china-753-hk-short-china-southern-1055-hk" target="_blank" data-smartkarma-citation="insights:45584" rel="noopener">2021 High Conviction: Pair Trade - Long Air China (753 HK), Short China Southern (1055 HK)</a>. Another positive note is that share price of <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> has surged by 63.6% from the rights issue price of HK$4.68, and this has added some HK$2.2bn to Air China's value on the additional holdings in CX from the rights.</p>

While China Southern Airlines (1055 HK) (CSA) is still showing the best traffic performance in absolute level, the Nov traffic showed that Air China Ltd (H) (753 HK) has started to pick up its momentum. We believe the three important things to note are: 1.) Air China recording the least retreat in passenger traffic momentum MoM, 2.) Air China has the least drop in passenger load factor MoM, and 3.) Air China gathering cargo momentum.Since Nov, Air China has outperformed CSA by 10pp, and we see good possibility for this trend to continue into 2021, hence our 2021 High Conviction: Pair Trade - Long Air China (753 HK), Short China Southern (1055 HK). Another positive note is that share price of Cathay Pacific Airways (293 HK) has surged by 63.6% from the rights issue price of HK$4.68, and this has added some HK$2.2bn to Air China's value on the additional holdings in CX from the rights.

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