Shanghai stock report - China Southern Airlines - A Share

CHINA

China Southern Airlines - A Share decreases 1.2% as investors eye AGM June 23, 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 decreased 11.0 fen (1.2%) from its last trading session of June 22 to close at CNY8.86. Compared with the SSE 180 Index which rose 40.0 points (0.5%) in the day, the relative price change was -1.7%. The volume was 0.8 times the average daily trading volume of 75.6 million shares.

UPCOMING EVENT: AGM

The annual general meeting (AGM) will be held on Friday, June 30.

SECTION 1

CHINA SOUTHERN AIRLINES - A SHARE BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 0.9%, divided by average yield of dividend yielding stocks in the SSE 180 Index of 2.4% is 37.0%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 6.8 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 3.1% in the last 3 years. This suggests the company is less profitable with a low margin of safety.

+ As per the Du Pont analysis, Return on Equity of 9.9% is lower than sector average of 10.5%. This is computed as net profit margin of 4.5% times asset turnover [sales/assets] of 0.62 times leverage factor [total assets/shareholders' equity] of 4.8.

1.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 23.3 [16.1]. We estimate China Southern Airlines - A Share stock is trading at a current year P/E of 11 and a forward year P/E of 7.2.

+ Return on Capital Employed 6.9% [7.7%].

1.3 Technicals:

Downtrend: The stock dropped 1.2% on high volatility today.

+ The price decreased 0.3% in the last week.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
% Prem to Vol Wtd Price0.7In Bottom Quartile
Price Change %-1.2In Bottom Quartile
Total Debt to Equity2.4In Bottom 8%

SECTION 2

CHINA SOUTHERN AIRLINES - A SHARE BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.3. Compared with the rest of the market the stock is undervalued and ranks in the top 9% of stock by value of Q Ratio.

+ Brandirectory have estimated China Southern Airlines - A Share brand value at CNY18.8 billion (US$2.8 billion). The Brand Value represents an impressive 11.5% of the estimated Enterprise Value of CNY163.7 billion (US$24 billion).

2.2 Undervaluation [compared with sector average]:

+ Price/Sales of 0.5 [0.9]. We estimate China Southern Airlines - A Share stock is trading at a current year Price/Sales of 0.5 and a forward year Price/Sales of 0.5.

+ Price to Free Cash Flow of 5.6 [8.2].

+ Price to EBITDA of 3.1 [4.2].

2.3 Technicals:

+ The 3.5% discount to 12-month high of CNY9.18 against the 31.8% premium to 12-month low of CNY6.72 suggests the stock continues to push for new highs.

+ In the last three months the stock has hit a new 52-week high four times, pointing to an uptrend.

+ The present value of CNY1,000 (PV1000) invested one year ago in China Southern Airlines - A Share is CNY1,277, comprising a capital gain of CNY262 and dividend reinvested of CNY14.

PV10001-week1-month1-year
600029.SS9971,0951,277
SSE 180 Index1,0281,0171,171

+ The present value of CNY1,000 (PV1000) invested five years ago in China Southern Airlines - A Share is CNY2,132, including a capital gain of CNY940 and dividend reinvested of CNY192.

+ 5 years Multiplier in CNY = 2.132x

+ Compound Annual Growth Rate (CAGR) in CNY = 16.3%

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 $US1,985, including a capital gain of $US807 and dividend reinvested of $US179.

+ 5 years ago USD 1 equalled CNY 6.3654

+ 5 years Multiplier in USD = 1.985x

+ Compound Annual Growth Rate (CAGR) in USD = 14.7%

Jun 23, 2017: USD 1 equals CNY 6.84

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverCNY524.4 million (US$76.7 million)In Top 3%
Price/Earnings/Growth0.1In Top 3%
Price/MAP2001.16In Top 7%
Earnings Yield %4.3In Top 8%
EPS Growth %111.1In Top 10%
Price to Sales0.5In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Momentum:

+ Volume: there were 59,190,000 shares worth CNY524.4 million (US$76.7 million) traded today. In the past week, volume was 0.7 times average and the shares were down 0.3%.

3.2 Moving Annual Return

600029Close (CNY)Dividends (CNY)Capital Gain / (Loss) %% YieldAnnual Return %
June 238.860.0826.21.127.4
1 Yr ago7.020.04(48.5)0.3(48.2)
2 Yrs ago13.640.04522.31.8524.1
3 Yrs ago2.190.05(27.3)1.7(25.7)
4 Yrs ago3.020.2(34.0)4.4(29.6)

SECTION 4

RANKING

4.1 Global Rank [out of 47,398 stocks] and Rank in the Asia Region [out of 21,950 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)9.1B1,462440
Total Assets (US$)27.2B1,308411
Revenue (US$)16.9B765221
Net Profit (US$)546.6M1,539449
Return on Equity %9.912,8126,698
Net Profit Margin %4.518,0159,757
Price to Book1.717,8409,838
Price/Earnings23.613,4346,616
Yield %0.916,2828,313
PV$1000 (1Year) US$*1,23015,6437,733
US$* Change (1Year) %20.914,9537,452

* 1 year ago USD 1 = CNY 6.58

Jun 23, 2017: USD 1 equals CNY 6.84

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 147/895 in BSS News Bites' ranking of Shanghai performers in the past year, a percentile ranking of 84.

SECTION 5

CHINA SOUTHERN AIRLINES - A SHARE FINANCIALS

5.1 Financials Summary

Year endedDec 2015Dec 2014Dec 2013
Sales (USD B)1716.414.4
Pretax (USD M)898.7450.4492.1
Net (USD M)548.8261278.4
EPS (CNY)0.380.180.245

5.2 Annual Report for the year ended December 31, 2015 (year-on-year comparisons with previous corresponding period)-

China Southern Airlines - A Share Net Profit up 110%

Favourable Changes:

+ Total revenue up 3.7% from CNY111.6b ($US18.0b) to CNY115.8b ($US17.8b).

+ EBIT Margin up from 4.8% to 7.4%.

+ Interest cover up 58.3% from 2.4 to 3.8.

+ EBIT to total assets up from 2.8% to 4.5%.

+ Profit before tax to Sales up from 2.7% to 5.3%.

+ Interest expenses to Sales down from 2% to 1.9%.

+ Debt to Equity down 33% from 1.8 to 1.2.

+ Total liabilities to Total assets down 5.2% from 0.8 to 0.7.

+ Total non-current assets to Total Assets up from 85.5% to 92.4%.

+ Fixed Assets to Total Assets up from 70.9% to 76.8%.

+ Net tangible assets per share up 9.3% from CNY3.64 (US58.7c) to CNY3.98 (US61.2c).

Unfavourable Changes:

+ Current ratio down 56.9% from 0.5 to 0.2.

+ Total current assets to Total Assets down from 14.5% to 7.6%.

+ Cash to Total Assets down from 8.1% to 2.5%.

+ Total Liabilities to EBITDA of 6.8 compares unfavourably with the Joseph Piotroski benchmark of <5. However, it has improved by 25% from the previous year's ratio of 9.0.

+ Total Liabilities to Operating Cash Flow of 5.8 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 46.3% from the previous year's ratio of 10.7.

Note:

+ Total revenue to total assets steady at 0.6.

+ Depreciation to Sales up from 9.7% to 10.2%.

+ Tax expenses to Sales up from 0.6% to 1.1%.

+ Current Debtors to Total Assets steady at 1.4%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (fen)
23 Jun 20178
23 Jun 20164
23 Jun 20154
23 Jun 20145
23 Jun 201320

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
Industry GroupPassenger Transportation Services
IndustryAirlines
Economic SectorIndustrials
Business SectorTransportation

6.3 Issued Capital

Based on 7,022,650,000 issued shares the market capitalisation is CNY62.2 billion (US$9.1 billion).

SECTION 7

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

May 24: China Southern Airlines - A Share: Notice of Convening Annual General Meeting of 2016

May 24: China Southern Airlines - A Share announces AGM

April 12: China Southern Airlines - A Share: Announcement on Major Financial Indicators in 2016

April 05: China Southern Airlines - A Share: Announcement on Progress in Significant Issue and Trading Resumption

April 05: China Southern Airlines - A Share: Announcement on Continuous Trading Suspension

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