Shanghai stock report - China Southern Airlines - A Share

CHINA

China Southern Airlines - A Share rises for a third consecutive day, a three-day rise of 2.4% October 20, 2017 15:30 CST

NEWS BITES - BRIC

China Southern Airlines Limited - A Share (SS:600029), Shanghai's 3rd largest Airline company by market cap, has risen 4.0 fen (0.5%) for a third consecutive day on Friday. This brought its three-day rise to 19.0 fen (2.4%), compared with the SSE 180 Index which rose 48.8 points (0.6%) in the three days for a relative price increase of 1.8%. Cumulative volume in the 3 days was 0.5 times the average 3-day volume of 67.6 million shares. The stock last traded at CNY8.26.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicator

SECTION 3 PRICE VOLUME DYNAMICS

Technicals, Moving Annual Return, Beta & Alpha, Turnover Rate & Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 CHINA SOUTHERN AIRLINES - A SHARE BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

+ Brandirectory have estimated China Southern Airlines - A Share brand value at CNY18.2 billion (US$2.8 billion). The Brand Value represents an impressive 8.9% of the estimated Enterprise Value of CNY204.3 billion (US$30.9 billion).

+ As per the Du Pont analysis, Return on Equity of 11.1% is better than sector average of 7.5%. This is computed as net profit margin of 5.1% times asset turnover [sales/assets] of 0.57 times leverage factor [total assets/shareholders' equity] of 4.6.

1.2 Undervaluation [compared with sector average]:

+ Price/Sales of 0.7 [0.8]. We estimate China Southern Airlines - A Share stock is trading at a current year Price/Sales of 0.7 and a forward year Price/Sales of 0.6.

+ Return on Equity 11.1% [7.5%].

+ Return on Assets 2.9% [2.4%].

+ Return on Capital Employed 5.8% [4.9%].

1.3 Technicals:

Uptrend: The stock rose on high volatility today and expanding price range.

+ In the last three months the stock has hit a new 52-week high thrice.

+ The present value of CNY1,000 (PV1000) invested one year ago in China Southern Airlines - A Share is CNY1,151, comprising a capital gain of CNY138 and dividend reinvested of CNY14.

PV10001-week1-month1-year
600029.SS1,0059721,151
SSE 180 Index1,0061,0201,190

+ The present value of CNY1,000 (PV1000) invested five years ago in China Southern Airlines - A Share is CNY2,588, including a capital gain of CNY1,429 and dividend reinvested of CNY159.

+ 5 years Multiplier in CNY = 2.588x

+ Compound Annual Growth Rate (CAGR) in CNY = 20.9%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in China Southern Airlines - A Share is $US2,452, including a capital gain of $US1,301 and dividend reinvested of $US151.

+ 5 years ago USD 1 equalled CNY 6.2657

+ 5 years Multiplier in USD = 2.452x

+ Compound Annual Growth Rate (CAGR) in USD = 19.6%

Oct 20, 2017: USD 1 equals CNY 6.61

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverCNY248 million (US$37.5 million)In Top 5%
Price to Sales0.7In Top Quartile
Price/MAP2001.03In Top Quartile

SECTION 2 CHINA SOUTHERN AIRLINES - A SHARE BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 1.2%, divided by average yield of dividend yielding stocks in the SSE 180 Index of 2.5% is 48.8%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 19.9 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 3.9% in the last 3 years. This suggests the company is less profitable with a low margin of safety.

+ Revenue growth has shown signs of deterioration in recent quarters. [Quarter ended, all figures in %]

QtrRevenue GrowthNet Profit GrowthNet Profit Margin
Jun 17-5.2-21.44.6
Mar 1710.1-5.9

2.2 Overvaluation [compared with sector average]:

+ Price to Book of 2.1 [1.4].

+ Dividend yield of 1.2% [1.4%].

2.3 Technicals:

+ The price dropped 2.8% in the last month.

2.4 Low Performance Indicator:

DescriptionValueRank In Market
Total Debt to Equity2.5In Bottom 6%

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 30,030,000 shares worth CNY248 million (US$37.5 million) traded today. In the past week, volume was 0.5 times average and the shares were up 0.5%. The volume was 0.4 times the average daily trading volume of 67.6 million shares.

+ China Southern Airlines - A Share is at a discount of 10.6% to its 12-month high of CNY9.24 on September 11. It is also at a premium of 24.1% to the 12-month low of CNY6.66 on December 15, 2016.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in 600029 would have produced a return of 15.1%.

600029Close (CNY)Dividends (CNY)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 208.260.113.81.415.1
1 Yr ago7.260.08(16.7)0.9(15.7)
2 Yrs ago8.710.04200.31.4201.7
3 Yrs ago2.90.047.41.58.9
4 Yrs ago2.70.05(20.6)1.5(19.1)

Close 5 years ago CNY3.40

3.3 Beta & Alpha:

+ Beta: the Beta of China Southern Airlines - A Share stock is 0.8. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is 0.7. The actual return of 17.19% exceeded the expected return of 16.5%, reflecting outperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 163.3% (or a turnover period of 7 months). This average length of ownership of the stock at 0.5 times the average holding period of 1 year 2 months for stocks in the SSE 180 Index suggests a larger number of speculators on the share register, making it less safe for long-term investors.

SECTION 4 RANKING

4.1 Global Rank [out of 47,822 stocks] and Rank in the Asia Region [out of 22,269 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)12.6B1,186347
Total Assets (US$)30.3B1,260398
Revenue (US$)17.4B818225
Net Profit (US$)764.3M1,249347
Return on Equity %11.111,5066,011
Net Profit Margin %5.117,5509,521
Price to Book2.119,26810,673
Yield %1.215,4437,458
PV$1000 (1Year) US$*1,17417,8648,044
US$* Change (1Year) %15.217,0997,758

* 1 year ago USD 1 = CNY 6.74

Oct 20, 2017: USD 1 equals CNY 6.61

4.2 Independent Ratings

China Southern Airlines Limited - A Share was ranked 32 in World Airline Awards list of Top 100 Airlines Companies in 2016; an improvement over a year from rank 36 in 2015.

It is the 544th largest by revenue in the Forbes Global 2000.

It is placed 198/916 in BSS News Bites' ranking of Shanghai performers in the past year, a percentile ranking of 78.

SECTION 5 CHINA SOUTHERN AIRLINES - A SHARE FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)17.417.617
Pretax (USD)1.2B929.9M466M
Net (USD M)768.4567.9270.1
EPS (CNY)-0.380.18

Sales was down 0.8% from US$17.6 billion in 2015 to US$17.4 billion in 2016. Net profit was up 35.3% from US$567.9 million in 2015 to US$768.4 million in 2016.

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (fen)
20 Oct 201710
20 Oct 20168
20 Oct 20154
20 Oct 20144
20 Oct 20135

SECTION 6 CHINA SOUTHERN AIRLINES - A SHARE PROFILE

6.1 Activities

China Southern Airlines Company provides commercial airline services throughout China, Hong Kong and Macau regions, Southeast Asia and other parts of the world. The Company conducts a portion of its airline operations through its airline subsidiaries, including Xiamen Airlines, Southern Airlines (Group) Shantou Airlines Company Limited (Shantou Airlines), Zhuhai Airlines Company Limited (Zhuhai Airlines), Guizhou Airlines Company Limited (Guizhou Airlines) and Chongqing Airlines (collectively, the Airline Subsidiaries).

6.2 Industry & Sector

Classification LevelName of Sector
Business SectorTransportation
Industry GroupPassenger Transportation Services
IndustryAirlines
Economic SectorIndustrials

6.3 Issued Capital

Based on 10,088,170,000 issued shares the market capitalisation is CNY83.3 billion (US$12.6 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

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September 25: China Southern Airlines - A Share: Announcement on Resolutions of 17th Session of 7th Directorate Meeting

The Company held the 17th session of the 7th directorate meeting on September 19, 2017, which discussed and approved issues including the proposal of scheme (amendment) of non-public A shares issuance and non-public H shares issuance, the proposal of connected transactions involved in this non-public A shares issuance and non-public H shares issuance and the proposal of research report (amendment) on feasibility analysis of usage of funds raised in non-public A shares issuance.

September 15: China Southern Airlines - A Share: Announcement on Major Financial Indicators in 1st Half of 2017

Basic earning per share (yuan) 0.28

Weighted average return on net assets (%) 6.20

July 24: China Southern Airlines - A Share: Announcement on Implementation of Rights and Interests Distribution for 2016

The Company implements the scheme of rights and interests distribution for 2016 as follows: a cash dividend of RMB0.1 (taxes included) per A share.

Record date: July 25, 2017

Ex-dividend date: July 26, 2017

Cash dividend payable date: July 26, 2017

July 07: China Southern Airlines - A Share: Announcement on Resolutions of Annual General Meeting of 2016

The Company held the Annual General Meeting of 2016 on June 30, 2017, which discussed and approved issues including the scheme of profit distribution for 2016, the engagement of external auditor and authorizing the directorate to decide upon its remuneration and the signing of the "Framework Agreement on Aircraft Financing Lease in 2nd Half of 2017" with China Southern Airlines International Financing Lease Co., Ltd.

July 04: China Southern Airlines - A Share announces dividend

China Southern Airlines - A Share today announced a cash dividend of 10.0 fen per share. The ex dividend date is Wednesday, July 26, 2017 and the record date is Tuesday, July 25, 2017 and it is payable on Wednesday, July 26.

Contact: 86-20-86124736

Physical Address: 278 Ji Chang Road Guangzhou, Guangdong, 510405 China

State/Province/Country: GNG, China

Country of Incorporation: China

Exchange: Shanghai Stock Exchange (SSE)

ISIN: CNE000001FG0

SS:600029; SHA:600029; CH:600029; 600029.SS

PermID: 4295864276

China Southern Airlines Co Ltd

Source: www.BuySellSignals.com