Podcast by Magellan Asset Management, Magellan Asset Management

MAGELLAN - IN THE KNOW

Podcast by Magellan Asset Management

Magellan Asset Management

‘In The Know’ is a new monthly investment podcast brought to you by Magellan Asset Management, one of Australia’s leading global equities investors. We seek to bring you timely, unique and thought-provoking insights to help you make sense of today’s investment landscape. From deep dives into the latest macroeconomic and geopolitical issues, to our analysis on sectors and stocks on global markets. Join Magellan, as they connect with a myriad of experts in their field, including CEOs of stocks we hold, global leaders and consultants in finance, investing, risk and politics, and key members of our investment team and business. ‘In The Know’ - a monthly podcast from Magellan is worth investing your time in! Magellan - Experts in global investing.

Thematic (Sector/Industry)

<ul>
<li>Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers</li>
<li>Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand</li>
<li>Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors</li>
</ul>
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.


Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers
Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand
Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Lessons Learnt from Investing in Essential Services

Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

Hainan Meilan International Airport / Equity Bottom-Up

<ul>
<li>1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.</li>
<li>We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.</li>
<li>While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.</li>
</ul>


1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.
We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.
While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.


Meilan Airport (357 HK): Not Out of the Woods Yet

<ul>
<li>We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.</li>
<li>The takeaway is mixed as we see both positives and negatives relative to our expectations.</li>
<li>We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.</li>
</ul>


We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
The takeaway is mixed as we see both positives and negatives relative to our expectations.
We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.


Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hainan Meilan International Airport / Event-Driven

<ul>
<li>Back On 29 September 2019, <a href="https://www.smartkarma.com/entities/hainan-meilan-international-airport-company-limited" target="_blank" data-smartkarma-citation="entities:12545:1" rel="noopener">Hainan Meilan International Airport (357 HK)</a> entered into a subscription agreement with Hopu-affiliate Aero Infrastructure, for 200mn new H shares at HK$4.69/share.</li>
<li>That issuance failed as CSRC approval was not secured by the Long Stop. Hopu reckoned HMIA reneged on its duties to secure approval and lodged a notice of arbitration.</li>
<li>HKIAC recently agreed and opines HMIA did not use its best endeavours to complete the subscription. Hopu is seeking up to HK$6.962bn in compensation. Quite the overhang.</li>
</ul>


Back On 29 September 2019, Hainan Meilan International Airport (357 HK) entered into a subscription agreement with Hopu-affiliate Aero Infrastructure, for 200mn new H shares at HK$4.69/share.
That issuance failed as CSRC approval was not secured by the Long Stop. Hopu reckoned HMIA reneged on its duties to secure approval and lodged a notice of arbitration.
HKIAC recently agreed and opines HMIA did not use its best endeavours to complete the subscription. Hopu is seeking up to HK$6.962bn in compensation. Quite the overhang.


Hainan Meilan's (357 HK)'s Arbitration Case Is Not Without Merit

<ul>
<li>FY22 results announced last week were in line excluding non-recurring items. The results provided latest evidence of monetization potential of its passenger traffic and insights into its cost base.</li>
<li>We trim 2023 net profit estimate by 10% to RMB520 million and maintain RMB1 billion net profit estimate for 2025.  Expect 25%/150% return by 2023/25 respectively based on 20x P/E.</li>
<li>Duty-Free concession agreement renewal in 2025 is a key positive catalyst, but we also caution potential follow-on share issuance this year could be an overhang on stock price.  </li>
</ul>


FY22 results announced last week were in line excluding non-recurring items. The results provided latest evidence of monetization potential of its passenger traffic and insights into its cost base.
We trim 2023 net profit estimate by 10% to RMB520 million and maintain RMB1 billion net profit estimate for 2025.  Expect 25%/150% return by 2023/25 respectively based on 20x P/E.
Duty-Free concession agreement renewal in 2025 is a key positive catalyst, but we also caution potential follow-on share issuance this year could be an overhang on stock price.  


Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook

China

Hainan Meilan International Airport Company Limited provides airfield services, terminal facilities, ground handling services, passenger and cargo handling services. The Company also leases commercial and retail space at the Meilan Airport, operates airport-related business franchising, advertising, car parking, tourism services, and sells duty-free and consumable goods.

Hainan Meilan International Airport (357 HK)

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Hainan Meilan International Airport (357 HK)

Lessons Learnt from Investing in Essential Services

The podcast explores the benefits of investing in infrastructure assets for reliable long-term cash flows and opportunities for growth.

MAGELLAN - IN THE KNOW

Meilan Airport (357 HK): Not Out of the Woods Yet

1H23 results suggests slow recovery in duty free sales and elevated cost base will continue pressuring its bottom line and profitability probably...

Eric Chen

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

We have mixed takeaways after talking to the company with regard to key topics such as passenger traffic, duty-free sales and progress of...

Eric Chen

Hainan Meilan's (357 HK)'s Arbitration Case Is Not Without Merit

The arbitration is an overhang. HMIA should aim to reach a settlement with Hopu. The announced upward adjustment in its slot capacity is positive. ...

David Blennerhassett

Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook

Our revised financials post FY22 results point to RMB520 million / RMB 1 billion net profit for 2023/25 respectively. Maintain RMB10 billion/20...

Eric Chen

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)