Morningstar | 600029 Updated Forecasts and Estimates from 07 Mar 2019
We continue to see China Southern as fairly valued as we await its full-year results release at the end of March. Our no-moat rating is unchanged. Since October 2018, the airline’s growth in cargo supply has consistently outpaced that of demand by an average of almost 700 basis points. We believe the underperformance in cargo might have been affected by the U.S.-China trade war. Management continues to guide for a passenger capacity increase of a low teens percentage for 2019, a rate that’s faster than those of the previous two years. It’s also worth noting that China Southern is set to relocate from Beijing Capital International Airport to the new Beijing Daxing International Airport starting in late 2019. We think yields might come under a little bit of pressure during the three years of relocation as China Southern offers ticket discounts to attract travelers to the new airport, which is further away.We continue to believe that minimal switching costs and low entry barriers make it extremely difficult for airlines to retain competitive advantages in the industry. Even with the largest flight capacity and extensive global coverage, China Southern still faces fierce competition from other domestic legacy carriers, such as China Eastern and Air China. Air travel has been further commoditized following the emergence of high-speed railway, which renders regional travel (500-800 kilometers) unprofitable for top airline carriers.
China Southern Airlines and its subsidiaries are engaged in the provision of commercial airline services throughout the People's Republic of China, Hong Kong, Macau and Taiwan regions, Southeast Asia and other parts of the world. Co. also provides air cargo and mail services. Co.'s airline operations are fully integrated with its airline-related businesses, including aircraft and engine maintenance, flight simulation and air catering operations. As of Dec 31 2012, Co. operated a fleet of 491 aircraft: 243 boeing, 225 airbus and 23 others. Co. had carried 86,485,000 passengers, and 1,232,000 tons cargo and mail.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.