China Southern Airlines - A Share in bottom 3% performers of SSE Composite Index 24 February 2020

NEWS BITES - BRIC

China Southern Airlines Limited - A Share (SS:600029), Shanghai's 2nd largest Airline company by market cap, has dropped 21.0 fen (3.3%) from its previous trading session to close at CNY6.09. This makes China Southern Airlines - A Share's stock the thirty-sixth lowest performer in the SSE Composite Index of 1450 stocks which was down 0.3% on Monday. This also indicates a relative price change of -3.1%. The fall was exacerbated by high volume of 1.9 times the average daily volume of 52.4 million shares. There were 101,240,000 shares worth CNY616.6 million (US$87.6 million) traded today. Today the stock traded between its three-day high of CNY6.25 and ten-day low of CNY6.03.

Stock Summary

CurrencyChinese Yuan (CNY) 1 USD = 7.04 CNY
Today's close (CNY)6.09
52-Week Range (CNY)5.3-9.6
SectorAirlines sector
Shares Outstanding12,267,170,000
Market CapCNY74.7 billion (US$10.6 billion)

Highlights in today's Report:

SECTION 1 TODAY'S BEARISH SIGNALS

SECTION 2 TODAY'S BULLISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CNY6.09):

SECTION 3 The Past Week

SECTION 4 ONGOING BULLISH PARAMETERS

SECTION 5 ONGOING BEARISH PARAMETERS

SECTION 6 RANKING

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 CHINA SOUTHERN AIRLINES - A SHARE BEARISH SIGNALS

1.1 Overvaluation [compared with sector average]:

Dividend Yield

+ The relative yield of China Southern Airlines - A Share, defined by its yield of 0.8%, divided by average yield of dividend yielding stocks in the SSE Composite Index of 2.5% is 33.5%. This suggests China Southern Airlines - A Share stock is overvalued in dividend yield terms.

Price to Sales

+ Price/Sales of 0.5 [0.4].

Price to Book

+ Price to Book of 1.2 [0.9].

1.2 Downtrend:

Today's Volatility:

+ China Southern Airlines - A Share drops 3.3% on high volatility: Today its volatility (highest price minus lowest price/lowest price) of 3.6% was 1.3 times the average daily volatility of 2.9%, up from 1.6% on Friday and 2.4% on Thursday. A fall in the price on high volatility is a bearish signal.

Price/Moving Average Price and MACD:

+ The Price/MAP of 0.87 for 600029 is lower than the Price/MAP for the SSE Composite Index of 1.01.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 6.2 minus the 26-day EMA of 6.34 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

+ The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 200 days this ratio has been under 0.9 11 times suggesting further downside. The 50-day EMAP has decreased to CNY6.51. A decrease is another bearish indicator.

+ In the past 200 days this ratio has been under 0.87 just seven times suggesting a support level. The stock is trading below both its MAPs and the 50-day MAP of CNY6.71 is lower than the 200-day MAP of CNY7.01, a bearish indicator. The 200-day MAP has decreased to CNY7.01. A decrease is another bearish indicator.

Past Week:

+ China Southern Airlines Limited - A Share is placed 1308/1442 in BuySellSignals' ranking of Shanghai performers in the past week, a percentile ranking of 10.

+ In the past week, volume was 1.6 times average and the shares were down 1.9%. Monday's close price is at a 2.5% discount to its 5-day Volume Weighted Average Price (VWAP) of CNY6.25.

Past Month:

+ The price tumbled 8.8% in the past month. The fall has been exacerbated by robust volume of 1.5 times average for the month.

+ The present value of CNY1,000 (PV1000) invested one month ago in China Southern Airlines - A Share is CNY912, for a capital loss of CNY88.

Falling Relative Strength (1mo, 3 mo, 6 mo):

+ In the Shanghai market of 1,450 stocks traded today, the stock has a 6-month relative strength of 21 indicating it is trailing 79.0% of the market.

+ Also, the relative strength percentile is falling at 21 for 6 months, 13 for 3 months and 11 for 1 month.

1.3 Low Price Performance Indicators and rank of China Southern Airlines - A Share in the Shanghai market:

DescriptionValueRank In Market
% Prem to Vol Wtd Price0.1In Bottom 1%
Price/MAP500.91In Bottom 7%
Price/MAP2000.87In Bottom Quartile

SECTION 2 CHINA SOUTHERN AIRLINES - A SHARE BULLISH SIGNALS

2.1 Undervaluation [compared with sector average]:

MCap/Total Assets

+ 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 quartile of stock by value of Q Ratio.

Brand Value/Enterprise Value

+ Brandirectory have estimated China Southern Airlines - A Share's brand value at CNY19.4 billion (US$2.8 billion). The Brand Value represents an impressive 9.0% of the estimated Enterprise Value of CNY214.5 billion (US$30.5 billion). Enterprise Value is defined as MCap of CNY74.7 billion plus net debt of CNY139.8 billion.

2.2 Undervaluation Indicator and rank of China Southern Airlines - A Share in the Chinese market:

DescriptionValueRank In Market
Price to Sales0.5In Top Quartile

2.3 High Price Performance Indicators and rank of China Southern Airlines - A Share in the Shanghai market:

DescriptionValueRank In Market
MCapCNY74.7 billionIn Top 6%
Today's Trading TurnoverCNY616.6 million (US$87.6 million)In Top 6%

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CNY6.09):

SECTION 3 The Past Week

3.1 Snapshot: China Southern Airlines - A Share stock was down 12.0 fen or 1.9% in the past week. Volume in the week was 1.6 times average trading of 262.1 million shares. It underperformed the SSE Composite index in 3 out of 5 days. The price ranged between a low of 6.17 on Tuesday, Feb 18 and a high of 6.4 on Thursday, Feb 20.

DayChina Southern Airlines - A ShareClose price [CNY]Price change %Relative change %Comment
FridayDecreases 1.6% on robust volume6.3-1.6-1.9Steepest Fall; VI*=1.5
ThursdayUp 3.7% in 2 days6.42.60.7Week-high of 6.4 Top Rise; VI*=1.995
WednesdayAdds CNY858.7 million (US$122.6 million) in MCap, top heavyweight rise in Airlines sector6.241.11.5VI*=1.8
TuesdayDecreases weakening below moving average price6.17-0.6-0.7Week-low of 6.17
MondayUp 2.6% in 2 days6.211.6-0.6Rises for a second consecutive day

[Volume Index (VI); 1 is average]

3.2 Volatility:

+ China Southern Airlines - A Share is at a discount of 36.9% to its 12-month high of CNY9.65 on April 04, 2019. It is also at a premium of 14.0% to the 12-month low of CNY5.34 on February 04, 2020.

SECTION 4 ONGOING BULLISH PARAMETERS

4.1 Performance:

+ Return on Capital Employed 2.8% [0.04%].

4.2 Growth:

Quarterly Trend in Revenue and Net Profit Margin:

+ Net Profit margin has shown signs of recovery in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit Margin
Sep 19 [Q3]-6.5
Jun 19 [Q2]-6.2-3.3

4.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 10.1%. The Moving Annual Return has been positive in 3 out of 5 years.

600029Close (CNY)Dividends (CNY)Capital Gain / (Loss) %% YieldAnnual Return %
Feb 246.090.05(21.9)0.6(21.3)
1 Yr ago7.80.1(29.7)0.9(28.8)
2 Yrs ago11.090.148.11.349.4
3 Yrs ago7.490.0816.31.217.6
4 Yrs ago6.430.04330.833.8

Close 5 years ago CNY4.84

4.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 129.3% (or a turnover period of 9 months). The average length of ownership of the stock is 1.1 times the average holding period of 8 months for stocks in the SSE Composite Index.

SECTION 5 ONGOING BEARISH PARAMETERS

5.1 High Debt Indicators:

+ The debt to equity ratio of 194.8% is above a safe benchmark figure of 70%. However, it has improved from 253.4% a year ago.

+ Total Liabilities/EBITDA of 38 compares unfavourably with the Joseph Piotroski benchmark of 5.

DescriptionValueRank In Market
Debt to Equity1.9In Bottom Quartile

5.2 Low Performance Indicators and rank of China Southern Airlines - A Share in the Chinese market:

DescriptionValueRank In Market
EBITDA Margin %3.3In Bottom Quartile
Return on Assets [ROA] %1.4In Bottom Quartile

5.3 Declining ADVT Past five Years

Avg. Daily Volume Traded 12 months ended Feb 24, million shares

YearADVT
202052.4
201975.7
201884.0
201777.9
2016199.2

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 73.7% to 52.4 million shares.

5.4 Declining VWAP

Past five years, 12 months ended Feb 24 (CNY)

YearHigh PriceVWAPLow Price
20209.657.395.34
201912.428.165.48
201812.699.57.21
20178.637.015.4
201615.979.584.57

In the past five years Volume Weighted Average Price (VWAP) has decreased by 22.8% to CNY7.39. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

5.5 Declining Average Daily Turnover

Past five years, 12 months ended Feb 24 (CNY million)

YearAverage Daily Turnover
2020373.6
2019596.0
2018768.9
2017533.3
20161839.9

In the past five years, average daily share turnover has decreased 79.7% to CNY373.6 million (US$53.1 million). This suggests decreased liquidity.

SECTION 6 CHINA SOUTHERN AIRLINES - A SHARE RANKING

Rank of China Southern Airlines - A Share in the SSE Composite Index [out of 1433 stocks], in the Total Shanghai Market [out of 1440 stocks] and in the Airlines sector [out of 6 stocks]

DescriptionValueIn SSE Composite IndexIn Total Shanghai MarketIn Airlines sector
MCap (CNY)74.7B74752
Total Assets (CNY)246.7B56561
Revenue (CNY)143.6B45451
Net Profit (CNY)3B1091102
Return on Equity %5.39469523
Net Profit Margin %2.41,1101,1164
Price to Book1.22502503
Yield %0.86946972
PV1000 (1Year) CNY7861,2801,2865

SECTION 7 CHINA SOUTHERN AIRLINES - A SHARE SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended February 24 has improved from 4.0 fen in 2016 to 5.0 fen in 2020; there were 1 decline in the past 5 years. Dividends were down 50.0% for the 12 months ended February 24 from 10.0 fen in 2019 to 5.0 fen in 2020.

7.2 Quarterly Report: Key Parameters

Quarterly Report Analysis Q3 2019: China Southern Airlines - A Share reports recovery in Net Profit

China Southern Airlines - A Share (SS:600029) announced net profit for the quarter-ended 30 September 2019 of CNY2.4b ($US335m), recovered from CNY959m ($US135m) in the previous corresponding period.

Quarter-ended30 Sep [Q3/2019]30 Jun [Q2/2019]31 Mar [Q1/2019]
Revenue, CNY billion43.735.337.6
Revenue, $US billion6.15.05.3
Sequential growth in Revenue %--6.18-
Net Profit, CNY2.4billion-959million2.6billion
Net Profit, $US million335-135372

Compared with the previous corresponding period [PCP; Q3/2018], year-over-year [y.o.y.] Revenue was up 5.8% and Net Profit was up 17.2%.

Quarter-ended30 Sep [Q3/2019]30 Sep [Q3/2018]
Revenue, CNY billion43.741.3
Revenue, $US billion6.15.8
PCP growth in Revenue %5.7915.45
Net Profit, CNY billion2.42.0
Net Profit, $US million335286
PCP growth in Net Profit %17.17-52.41

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Net profit up 17.2% from CNY2.0b ($US296.7m) to CNY2.4b ($US335.1m)

- Total revenue up 5.8% from CNY41.3b ($US6.0b) to CNY43.7b ($US6.1b)

- EBIT to Sales up from 8% to 8.3%

- Profit before tax to Sales up from 8% to 8.3%

- Profit after tax to Sales up from 4.9% to 5.5%

Note:

- Tax expenses to Sales down from 2% to 1.8%

Currency Conversion (September 30, 2019): $US1 = CNY7.13

Currency Conversion (September 30, 2018): $US1 = CNY6.87

7.3 Annual Report: Key Parameters

FY2018 Annual Report: China Southern Airlines - A Share reports Net Profit of CNY3.0b ($US434m)

China Southern Airlines - A Share (SS:600029) reported net profit for the year-ended 31 December 2018 of CNY3.0b ($US434m).

Highlights

- Net tangible assets per share of CNY5.79 (US84.1c)

- Sales revenue of CNY143.6b ($US20.9b)

- Net profit of CNY3.0b ($US433.6m)

- EBIT Margin of 3.1%

- A track record of profits in 4 of the last 4 years

- Total debt to net tangible assets of 205.4%

- Total Liabilities to EBITDA of 38.0: this compares unfavourably with the Joseph Piotroski benchmark of <5

- Debt to Equity of 1.9

- Total liabilities to Total assets of 0.7

- Current ratio of 0.3

- Working capital to total assets of -24.2%

- EBIT to total assets of 1.8%

- Total revenue to total assets of 0.6

Annual Report: 2018

Company Name : China Southern Airlines Limited - A Share (600029)
December 3120182018
DescriptionCNY m$US m
Sales Revenue143,62320,878.5
EBITDA4,781695
EBIT4,487652.3
Pre-Tax Profit/(Loss)4,487652.3
Profit/(Loss) after Tax2,983433.6
Working Capital(59,615)(8,666.2)
Current Assets24,0723,499.3
Current Liabilities83,68712,165.6
Shareholders' Funds65,0039,449.5
Total Liabilities181,65226,406.8
Total Assets246,65535,856.2
Current Debt24,7393,596.3
Non-Current Debt78,34211,388.6
Total Debt126,63818,409.4
Operating Cash Flow19,5852,847.1
Net Assets65,0039,449.5
Net Tangible Assets61,6548,962.6

Per Share figures

December 3120182018
Sales1,170.8fen$US1.7
EBIT36.6fenUS5.3c
EBITDA39fenUS5.7c
Cash72.7fenUS10.6c
Working Capital(486fen)(US70.6c)
Shareholders' Funds529.9fenUS77c
Total LiabilitiesCNY14.8$US2.2
Total AssetsCNY20.1$US2.9
Current Debt201.7fenUS29.3c
Non-Current Debt638.6fenUS92.8c
Total Debt1,032.3fen$US1.5
Net Tangible Assets579fenUS84.1c

Performance Ratios

December 312018
Return on Equity (%)5.3
Return on Assets (%)1.4
Total debt to net tangible assets (%)205.4
Total Liabilities to EBITDA38
Debt/Equity1.9
Total Liabilities/Total Assets0.7
Current Ratio0.3
Common Size Ratios by Assets %
Total non-current assets to Total Assets 90.2
Fixed Assets to Total Assets 84.3
Total current assets to Total Assets 9.8
Current Debtors to Total Assets 4.3
Long-term investments to Total Assets 3.1
Common Size Ratios by Sales %
Cost of Goods Sold to Sales 89.5
Sales and marketing expenses to Sales 7.5
Profit before tax to Sales 3.1
Tax expenses to Sales 0.7

Currency Conversion (December 31, 2018): $US1 = CNY6.88

SECTION 8 CORPORATE PROFILE

8.1 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).

8.2 Issued Capital and MCap

Based on 12,267,170,000 issued shares the market capitalisation is CNY74.7 billion (US$10.6 billion).

COMPANY IDENTIFIERS

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)

Business Sector: Transportation

Industry Group: Passenger Transportation Services

Industry: Airlines

Economic Sector: Industrials

ISIN: CNE000001FG0

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

PermID: 4295864276

RIC: 600029.SS

China Southern Airlines Co Ltd

Source: www.BuySellSignals.com