China Southern Airlines (1055.HK): The Low Season of the Fourth Quarter under Great Expectations December 6, 2017

Investment summary

  • Nearly 10% Increase in Net Profit in the First Three Quarters
  • Business Data Leading in Three Airline Giants
  • The Low Season of the Fourth Quarter under Great Expectations

Investment thesis

On the premise of the improvement of the supply and demand pattern, we expressed cautious optimism for the promotion of the industry next year. In August, CSA raised Hshares
and introduced U.S. airline strategy investors, which was expected to help to develop the company`s Euro-American flight. At the same time, the company`s project of raising RMB13.3 billion is moving forward, which will further increase assets when finished. In accordance with the latest data, we adjust the estimate of the Company`s EPS to RMB0.71/0.86 in 2017 and 2018. The target price is HK$8.45, equivalent to 10/8.3x and 1.4/1.25x estimated P/E ratio and P/B ratio, respectively, in 2017 and 2018. The “accumulate” rating is given.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors.She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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