Shanghai stock report - China Southern Airlines - A Share

CHINA

China Southern Airlines - A Share sinks 5.1% on robust volume April 20, 2018 15:30 CST

NEWS BITES - BRIC

China Southern Airlines Limited - A Share (SS:600029), Shanghai's 2nd largest Airline company by market cap, has sunk 50.0 fen (5.1%) from its last trading session of April 19 to close at CNY9.39. Compared with the SSE Composite Index which fell 37.5 points (1.2%) in the day, the relative price change was -3.9%. The fall was exacerbated by robust volume of 1.5 times the average daily volume of 86.7 million shares.

THE PAST TWO YEARS

China Southern Airlines - A Share rises for a second consecutive year, a two-year rise of 51%

China Southern Airlines Limited - A Share (SS:600029), extended its gains in the past year, rising an additional CNY1.42 (17.8%) to close at CNY9.39. In the previous year the shares rose CNY1.76 (28.3%). The shares have lifted CNY3.18 (51.2%) over the past two years, compared with the SSE Composite Index which rose 98.9 points (3.3%) in the two years for a relative price increase of 47.8%.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

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

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, Oversold/Bullish/Support Signals, High Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Technicals

SECTION 4 RANKING

Global, Independent Rating

SECTION 5 FINANCIALS

Financials Summary, Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 CHINA SOUTHERN AIRLINES - A SHARE BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 1.1%, divided by average yield of dividend yielding stocks in the SSE Composite Index of 2.0% is 54.1%. 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.

1.2 Overvaluation [compared with sector average]:

+ Price to Book of 2.4 [1.5].

1.3 Technicals:

Significant Downtrend: The stock continues its significant downtrend. The stock dropped 5.1% on high volatility today.

+ The price plummeted 14.9% in the last month.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 10.05 minus the 26-day EMA of 10.38 is negative 0.33 suggesting a bearish signal. Both EMA prices are falling, another bearish signal.

+ Falls to Rises: in the past month the number of falls outnumbered rises 14:8 or 1.8:1.

+ The stock's relative price strength percentile is slipping at 93 for 6 months, 49 for 3 months and 8 for 1 month.

+ The stock has seen a fall of 23% in less than 8 weeks.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
Total Debt to Equity2.5In Bottom 5%
Volatility %7.0In Bottom Quartile
Price Change %-5.1In Bottom Quartile
Price/MAP500.85In Bottom Quartile

SECTION 2 CHINA SOUTHERN AIRLINES - A SHARE BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.5. 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 CNY17.3 billion (US$2.8 billion). The Brand Value represents an impressive 8.0% of the estimated Enterprise Value of CNY215.7 billion (US$34.3 billion).

+ As per the Du Pont analysis, Return on Equity of 11.1% is better than sector average of 8.0%. 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.

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 11.1% [8.0%].

+ Return on Assets 2.9% [2.5%].

+ Return on Capital Employed 5.8% [5.2%].

+ Dividend yield of 1.1% [0.9%].

2.3 Technicals:

+ The present value of CNY1,000 (PV1000) invested one year ago in China Southern Airlines - A Share is CNY1,192, comprising a capital gain of CNY178 and dividend reinvested of CNY14.

PV10001-week1-month1-year
600029.SS9248511,192
SSE Composite Index975972968

2.4 Oversold/Bullish/Support Signals:

+ At CNY9.39 the price is below the lower Bollinger band support of CNY9.55, indicating an upside for it to return to the band.

+ The stock is oversold according to the Williams % R indicator of -87.7, suggesting the price is close to its 14-day low of CNY9.20.

2.5 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverCNY1.2 billion (US$192.7 million)In Top 4%
Price to Sales0.8In Top Quartile
Price/MAP2000.94In Top Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 128,980,000 shares worth CNY1.2 billion (US$192.7 million) traded today. In the past week, volume was 0.8 times average and the shares were down 7.6%.

+ China Southern Airlines - A Share is at a discount of 27.5% to its 12-month high of CNY12.95 on February 07. It is also at a premium of 27.6% to the 12-month low of CNY7.36 on April 27, 2017.

+ The present value of CNY1,000 (PV1000) invested ten years ago in China Southern Airlines - A Share is CNY1,063, including a capital loss of CNY46 and dividend reinvested of CNY108.

+ 10 years Multiplier in CNY = 1.063x

+ Compound Annual Growth Rate (CAGR) in CNY = 0.6%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in China Southern Airlines - A Share is $US1,181, including a capital gain of $US60 and dividend reinvested of $US120.

+ 10 years ago USD 1 equalled CNY 6.9832

+ 10 years Multiplier in USD = 1.181x

+ Compound Annual Growth Rate (CAGR) in USD = 1.7%

Apr 20, 2018: USD 1 equals CNY 6.29

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 19.0%.

600029Close (CNY)Dividends (CNY)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 209.390.117.81.319.0
1 Yr ago7.970.0826.21.327.4
2 Yrs ago6.320.04(34.7)0.4(34.3)
3 Yrs ago9.680.04302.41.7304.1
4 Yrs ago2.40.05(30.9)1.4(29.4)

Close 5 years ago CNY3.48

SECTION 4 RANKING

4.1 Global Rank [out of 47,666 stocks] and Rank in the Asia Region [out of 22,769 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)15.1B973285
Total Assets (US$)31.9B1,246397
Revenue (US$)18.3B802231
Net Profit (US$)805.4M1,300360
Return on Equity %11.111,9056,321
Net Profit Margin %5.117,8989,928
Price to Book2.622,94813,392
Yield %1.017,5198,897
PV$1000 (1Year) US$*1,3059,0784,516
US$* Change (1Year) %41.27,9453,816

* 1 year ago USD 1 = CNY 6.89

Apr 20, 2018: USD 1 equals CNY 6.29

4.2 Independent Rating

+ Forbes 2000:

China Southern Airlines Limited - A Share is the 544th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 121/1152 in BSS News Bites' ranking of Shanghai performers in the past year, a percentile ranking of 90.

SECTION 5 CHINA SOUTHERN AIRLINES - A SHARE FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)18.218.417.7
Pretax (USD)1.2B970.3M486.2M
Net (USD M)801.7592.5281.8
EPS (CNY)-0.380.18

Sales were down 0.8% from US$18.4 billion in 2015 to US$18.2 billion in 2016. Net profit was up 35.3% from US$592.5 million in 2015 to US$801.7 million in 2016.

5.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Net profit up 35.3% from CNY3.7b ($US575.3m) to CNY5.1b ($US728.1m)

+ Profit before tax to Sales up from 5.5% to 6.7%.

+ Fixed Assets to Total Assets up from 76.8% to 87.5%.

+ Current Debtors to Total Assets up from 1.4% to 2.9%.

+ Long-term investments to Total Assets up from 0.1% to 2.6%.

+ Net tangible assets per share up 10.9% from CNY3.68 (US56.7c) to CNY4.08 (US58.7c).

Unfavourable Changes:

+ EBIT Margin down from 7.4% to 6.7%.

+ EBIT to total assets down from 4.5% to 3.8%.

+ Operating Cash Flow is negative.

+ Cost of Goods Sold to Sales up from 82% to 84%.

+ Total liabilities to Total assets up 6.8% from 0.7 to 0.8.

+ Total current assets to Total Assets down from 7.6% to 6.9%.

Note:

+ Total revenue steady at CNY114.8b ($US16.5b).

+ Total revenue to total assets steady at 0.6.

+ Tax expenses to Sales up from 1.2% to 1.5%.

+ Debt to Equity steady at 2.5.

+ Current ratio steady at 0.2.

+ Intangibles to Total Assets steady at 1.6%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (fen)
20 Apr 201810
20 Apr 20178
20 Apr 20164
20 Apr 20154
20 Apr 20145

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
Economic SectorIndustrials
Business SectorTransportation
Industry GroupPassenger Transportation Services
IndustryAirlines

6.3 Issued Capital

Based on 10,088,170,000 issued shares the market capitalisation is CNY94.7 billion (US$15.1 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

April 19: China Southern Airlines - A Share: Announcement on Resolution of Directorate Meeting

The Company held the special meeting of the 8th directorate on April 3, 2018, which discussed and approved the "Report on Usage of Previously Raised Funds as of December 31, 2017".

April 04: China Southern Airlines - A Share: Announcement on Major Financial Indicators in 2017

Basic earning per share (yuan) 0.60

Weighted average return on net assets (%) 12.84

April 04: China Southern Airlines - A Share: Announcement on Resolutions of 2nd Session of 8th Directorate Meeting

The Company held the 2nd session of the 8th directorate meeting on March 26, 2018, which discussed and approved issues including the scheme of profit distribution for 2017, the "Full Text of Annual Report of 2017, Abstract and Performance Announcement (Including Financial Statements Compiled According to the China Accounting Standards and the International Accounting Standards and Directorate Report)" and the appointment of external auditor.

February 27: China Southern Airlines - A Share: Announcement on Interest Payment of Phase I Corporate Bonds of 2016 in 2018

The interest of corporate bonds of 2016 (with the short description of "16 Southern Airlines 01") accruing from March 3, 2017 to March 2, 2018 will be paid on March 5, 2018.

Record date: March 2, 2018

Interest payable date: March 5, 2018

February 13: China Southern Airlines - A Share: Announcement on Resolution of Directorate Meeting

The Company held the special meeting of the 8th directorate on February 8, 2018, which discussed and confirmed the "Report on Project Assets Appraisal for China Southern Air Holding Company Planning to Transfer Equity of Zhuhai Free Trade Zone MTU Aero Engine Maintenance Co., Ltd. Held by Itself to the Company" (Zhong Lian Ping Bao Zi [2018] No.

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

RIC: 600029.SS

China Southern Airlines Co Ltd

Source: www.BuySellSignals.com