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China Analyst - Equity Long-Short, Onshore Credit

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Despite record losses in 2Q22, share price of <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> has rallied 14% YTD, outperformed the 23.9% decline in HSCEI and its Chinese peers. </li>
<li>Air China's stub value has returned to pre-pandemic level, but is primarily driven by the A-share. <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific (293 HK)</a> recovery is an important catalyst for narrowing H-A share discount.</li>
<li>News flow over the next 12 months, mostly related to further relaxation of quarantine requirements, will be positive. The surge in demand should support elevated passenger yield.  </li>
</ul>


Despite record losses in 2Q22, share price of Air China Ltd (H) (753 HK) has rallied 14% YTD, outperformed the 23.9% decline in HSCEI and its Chinese peers. 
Air China's stub value has returned to pre-pandemic level, but is primarily driven by the A-share. Cathay Pacific (293 HK) recovery is an important catalyst for narrowing H-A share discount.
News flow over the next 12 months, mostly related to further relaxation of quarantine requirements, will be positive. The surge in demand should support elevated passenger yield.  


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