China Southern Airlines - A Share outperforms 82% of the market 13 December 2019

NEWS BITES - BRIC

China Southern Airlines Limited - A Share (SS:600029), Shanghai's 2nd largest Airline company by market cap, has lifted 15.0 fen (2.2%) from its previous trading session to close at CNY6.86. Compared with the SSE Composite Index which rose 52.0 points (1.8%) in the day, the relative price increase was 0.5%. The rise has been propped up by high volume of 2.5 times the average daily volume of 47.8 million shares. In the Shanghai market of 1,448 stocks traded today, China Southern Airlines - A Share's stock has a 4-day relative price strength of 82 indicating it has outperformed 82% of the market. A price rise combined with a high relative strength is a bullish signal. There were 117,300,000 shares worth CNY804.7 million (US$115.4 million) traded today.

BULLISH TURNING POINT

Price/MAP50

The P/MAP [Price/Moving Average Price] was previously below 1 and falling. These were bearish indicators. China Southern Airlines - A Share's stock is now trading above its 50 day MAP at CNY6.80, a bullish indicator.

Stock Summary

CurrencyChinese Yuan (CNY) 1 USD = 6.97 CNY
Today's close (CNY)6.86
52-Week Range (CNY)6.4-9.6
SectorAirlines sector
Shares Outstanding12,267,170,000
Market CapCNY84.2 billion (US$12.1 billion)

Highlights in today's Report:

SECTION 1 TODAY'S BULLISH SIGNALS

SECTION 2 TODAY'S BEARISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CNY6.86):

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 BULLISH SIGNALS

1.1 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 CNY19.2 billion (US$2.8 billion). The Brand Value represents an impressive 8.6% of the estimated Enterprise Value of CNY224 billion (US$32.1 billion). Enterprise Value is defined as MCap of CNY84.2 billion plus net debt of CNY139.8 billion.

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

DescriptionValueRank In Market
Price to Sales0.6In Top Quartile

1.3 Uptrend:

Price/Moving Average Price and MACD:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 6.7 minus the 26-day EMA of 6.7 is positive suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0 just twice suggesting a resistance level. The 50-day EMAP has increased to CNY6.75. An increase is another bullish indicator.

Past Week:

+ China Southern Airlines Limited - A Share is placed 294/1438 in BuySellSignals' ranking of Shanghai performers in the past week, a percentile ranking of 80.

+ In the past week, volume was 1.0 times average and the shares were up 2.8%. Friday's close price is at a 1.1% premium to its 5-day Volume Weighted Average Price (VWAP) of CNY6.78.

Past Month:

+ The present value of CNY1,000 (PV1000) invested one month ago in China Southern Airlines - A Share is CNY1,027, for a capital gain of CNY27.

PV10001-week1-month
600029.SS1,0281,027
SSE Composite Index1,0191,029

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

DescriptionValueRank In Market
Today's Trading TurnoverCNY804.7 million (US$115.4 million)In Top 3%
MCapCNY84.2 billionIn Top 6%

SECTION 2 CHINA SOUTHERN AIRLINES - A SHARE BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

Dividend Yield

+ The relative yield of China Southern Airlines - A Share, defined by its yield of 0.7%, divided by average yield of dividend yielding stocks in the SSE Composite Index of 2.5% is 29.7%. This suggests China Southern Airlines - A Share stock is overvalued in dividend yield terms.

Price to Book

+ Price to Book of 1.4 [0.9].

2.2 Downtrend:

Price/Moving Average Price:

+ The Price/MAP of 0.96 for 600029 is lower than the Price/MAP for the SSE Composite Index of 1.04.

+ The price to 200-day MAP ratio is 0.96. In the past 200 days this ratio has been under 0.96, 75 times suggesting downside. The 50-day MAP of CNY6.80 is lower than the 200-day MAP of CNY7.11, another bearish indicator.

Slipping Relative Strength (1mo, 3 mo):

+ In the Shanghai market of 1,448 stocks traded today, the stock has a 6-month relative strength of 53 which means it has outperformed 53% of the market.

+ Also, the relative strength percentile is slipping at 77 for 3 months and 57 for 1 month.

2.3 Overbought/Bearish/Resistance Signals:

+ At CNY6.86 the price has risen above the upper Bollinger band resistance of CNY6.80, indicating a downside risk for it to fall back within the band.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CNY6.86):

SECTION 3 THE PAST WEEK

3.1 Snapshot: China Southern Airlines - A Share stock was up 19.0 fen or 2.8% in the past week. Volume in the week equalled average trading of 238.9 million shares. It underperformed the SSE Composite index in 3 out of 5 days.

DayChina Southern Airlines - A ShareClose price [CNY]Price change %Relative change %Comment
ThursdayDecreases6.71-0.6-0.3Steepest Fall
WednesdayRises 1.4% on high volatility6.751.41.1Top Rise; VI*=1.2
TuesdayDecreases6.66-0.1-0.2Price fall on slipping relative strength
MondayConsolidates after 2 days of consecutive rises6.670-0.1
FridayRises for a second consecutive day, a two-day rise of 1.7%6.671.20.8Rises for a second consecutive day

[Volume Index (VI); 1 is average]

3.2 Volatility:

+ China Southern Airlines - A Share is at a discount of 28.9% to its 12-month high of CNY9.65 on April 04. It is also at a premium of 6.7% to the 12-month low of CNY6.43 on October 09.

SECTION 4 ONGOING BULLISH PARAMETERS

4.1 Performance:

+ Return on Equity 5.3% [1.2%].

+ Return on Assets 1.4% [0.3%].

+ Return on Capital Employed 2.8% [1.8%].

+ As per the Du Pont analysis, Return on Equity [ROE] is less than stellar at 5.3%. ROE is computed as net profit margin of 2.4% times asset turnover [sales/assets] of 0.58 times leverage factor [total assets/shareholders' equity] of 3.8.

4.2 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 10.8%. The Moving Annual Return has been positive in 2 out of 5 years.

600029Close (CNY)Dividends (CNY)Capital Gain / (Loss) %% YieldAnnual Return %
Dec 136.860.05(7.8)0.7(7.1)
1 Yr ago7.440.1(27.4)1(26.4)
2 Yrs ago10.240.150.21.551.7
3 Yrs ago6.820.08(7.8)1.1(6.7)
4 Yrs ago7.390.0441.60.842.4

Close 5 years ago CNY5.22

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 Dec 13, million shares

YearADVT
201947.8
201894.6
201770.1
201680.5
2015208.0

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 77.0% to 47.8 million shares.

5.4 Declining VWAP

Past five years, 12 months ended Dec 13 (CNY)

YearHigh PriceVWAPLow Price
20199.657.566.43
201812.699.195.48
201711.428.276.53
20168.97.085.4
201515.979.194.18

In the past five years Volume Weighted Average Price (VWAP) has decreased by 17.7% to CNY7.56. 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 Dec 13 (CNY million)

YearAverage Daily Turnover
2019355.7
2018845.4
2017561.5
2016552.2
20151842.8

In the past five years, average daily share turnover has decreased 80.7% to CNY355.7 million (US$51 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 1435 stocks], in the Total Shanghai Market [out of 1442 stocks] and in the Airlines sector [out of 6 stocks]

DescriptionValueIn SSE Composite IndexIn Total Shanghai MarketIn Airlines sector
MCap (CNY)84.2B63642
Total Assets (CNY)246.7B56561
Revenue (CNY)143.6B45451
Net Profit (CNY)3B1091103
Return on Equity %5.39529574
Net Profit Margin %2.41,1151,1205
Price to Book1.43123123
Yield %0.77787832
PV1000 (1Year) CNY9281,0641,0664

SECTION 7 CHINA SOUTHERN AIRLINES - A SHARE SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended December 13 has improved from 4.0 fen in 2015 to 5.0 fen in 2019; there were 1 decline in the past 5 years. Dividends were down 50.0% for the 12 months ended December 13 from 10.0 fen in 2018 to 5.0 fen in 2019.

7.2 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 CNY84.2 billion (US$12.1 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)

Economic Sector: Industrials

Business Sector: Transportation

Industry Group: Passenger Transportation Services

Industry: Airlines

ISIN: CNE000001FG0

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

PermID: 4295864276

RIC: 600029.SS

China Southern Airlines Co Ltd

Source: www.BuySellSignals.com