Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Thematic (Sector/Industry)

<ul><li>Chinese airlines are to resume more international flights as the nation gradually eases tough rules that aim to prevent the spread of Covid-19.</li><li>The resumed routes will include flights to Tokyo, Bangkok, Seoul and Dubai, mostly from cities in the country’s prosperous coastal provinces.</li><li>International routes to and from China are operating at about one-twentieth the rate they did before the novel coronavirus emerged late in 2019.</li></ul>

Chinese airlines are to resume more international flights as the nation gradually eases tough rules that aim to prevent the spread of Covid-19.The resumed routes will include flights to Tokyo, Bangkok, Seoul and Dubai, mostly from cities in the country’s prosperous coastal provinces.International routes to and from China are operating at about one-twentieth the rate they did before the novel coronavirus emerged late in 2019.

Chinese Airlines to Add International Routes in Wake of Eased Covid Rules

Cross Asset Strategy

<ul><li>Cover Story: Will a barrier to the Yangtze River save Poyang Lake?</li><li>Unimpressive results reported for China's first Covid pill candidate</li><li>China private investment fund regulations stuck in limbo for another year</li></ul>

Cover Story: Will a barrier to the Yangtze River save Poyang Lake?Unimpressive results reported for China's first Covid pill candidateChina private investment fund regulations stuck in limbo for another year

CX Daily: Will a Barrier to the Yangtze River Save Poyang Lake?

Founder of Antler Capital

Stanley Tsai, CFA

Equity Bottom-Up

BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> 
As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

Last year, we saw the incoming of the Hainan Provincial Government to take control of <a href="https://www.smartkarma.com/entities/hna-group-co-ltd" target="_blank" data-smartkarma-citation="entities:25987:1" rel="noopener">HNA Group (HNAGRZ CH)</a> (HNA) and the potential sell-off HNA’s airline assets as spread positive for SANYPH 10/21s. The bonds rose to the high 70s before coming down to the high 40s in May on a series of negative headlines such as <a href="https://www.smartkarma.com/entities/hna-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29923:1" rel="noopener">HNA Technology Co Ltd (600751 CH)</a>’s default on a USD4bn loan from <a href="https://www.smartkarma.com/entities/agricultural-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1120:1" rel="noopener">Agricultural Bank Of China (1288 HK)</a> to finance the USD6bn buyout of Ingram Micro in 2016. (HNA agreed to sell Ingram Micro to Platinum Equity, a US private equity firm, last December for USD7.2bn.)
Asset sales have slowed due to a COVID-19 impact on the valuation of travel-related assets but the effort was on-going with financial support from Chinese banks, especially <a href="https://www.smartkarma.com/entities/china-development-bank" target="_blank" data-smartkarma-citation="entities:28423:1" rel="noopener">China Development Bank (SDBZ CH)</a>. The bankruptcy notice on 29-Jan proved that asset sales, credit facilities, and new management set up by the provincial government are simply not sufficient to keep HNA afloat. Both SANYPH 10/21s and HONAIR Perp fell about 10 points on the bankruptcy news.
The most important piece of recent news on HNA is the CNY109bn embezzlement (and hidden debt guarantee) figure which appears to us as the tip of the iceberg.  COVID-19 and the corporate governance issues will make it difficult to conclude on HNA’s recovery value on its bonds. Hence, even at 30c on the dollar, we cannot recommend buying HNA-related bonds including both SANYPH 10/21s and HONAIR Perp.

Last year, we saw the incoming of the Hainan Provincial Government to take control of HNA Group (HNAGRZ CH) (HNA) and the potential sell-off HNA’s airline assets as spread positive for SANYPH 10/21s. The bonds rose to the high 70s before coming down to the high 40s in May on a series of negative headlines such as HNA Technology Co Ltd (600751 CH)’s default on a USD4bn loan from Agricultural Bank Of China (1288 HK) to finance the USD6bn buyout of Ingram Micro in 2016. (HNA agreed to sell Ingram Micro to Platinum Equity, a US private equity firm, last December for USD7.2bn.)
Asset sales have slowed due to a COVID-19 impact on the valuation of travel-related assets but the effort was on-going with financial support from Chinese banks, especially China Development Bank (SDBZ CH). The bankruptcy notice on 29-Jan proved that asset sales, credit facilities, and new management set up by the provincial government are simply not sufficient to keep HNA afloat. Both SANYPH 10/21s and HONAIR Perp fell about 10 points on the bankruptcy news.
The most important piece of recent news on HNA is the CNY109bn embezzlement (and hidden debt guarantee) figure which appears to us as the tip of the iceberg.  COVID-19 and the corporate governance issues will make it difficult to conclude on HNA’s recovery value on its bonds. Hence, even at 30c on the dollar, we cannot recommend buying HNA-related bonds including both SANYPH 10/21s and HONAIR Perp.

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>The company that couldn’t stop buying</li>
<li>In rare role reversal, Britain blacks out Chinese TV </li>
<li>Confront, counter and push back: Biden on China</li>
<li>Trading carbon – and burning more coal</li>
<li>China hopes for the best from Myanmar “reshuffle” </li>
</ul><div class="content-remarks">In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</div>

China News That Matters
The company that couldn’t stop buying
In rare role reversal, Britain blacks out Chinese TV 
Confront, counter and push back: Biden on China
Trading carbon – and burning more coal
China hopes for the best from Myanmar “reshuffle” 
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

HNA/ CGTN/ US-China/ Environment/ Myanmar

China

Hainan Airlines Co., Ltd. provides passenger and freight air transportation. The Company also provides charter flight services. 

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Hainan Airlines Co (600221 CH)

Chinese Airlines to Add International Routes in Wake of Eased Covid Rules

Chinese airlines are to resume more international flights as the nation gradually eases tough rules that aim to prevent the spread of Covid-19.

Caixin Global

CX Daily: Will a Barrier to the Yangtze River Save Poyang Lake?

Cover Story: Will a barrier to the Yangtze River save Poyang Lake? Unimpressive results reported for China's first Covid pill candidate

Caixin Global

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

HNA Group: Bamboozled

HNA Group's latest update which still leads to more distrust in the company and its management. The embezzlement is the top of the iceberg, in our...

Bondcritic

HNA/ CGTN/ US-China/ Environment/ Myanmar

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)