We are all concerned about the badly beatened ZNH. But is this stock really that bad? When you study the fundementals and future prospectives, no problem with it--a 100% long term investment.
All the sentiments these days are from HK market. Some are senseless for ZNH trading here. For example, too much sliding down just because HK bank raised the interest rate! Does that relate to the performance of the company? Definitely not. If the interest rate in China rises, we have to worry. People in HK just want to get out the scaring stock market and oversell 1055 (ZNH). The enviroment in US is different, it is a bull. We should not just equalize ZNH to 1055, unfortunately that is the case now. Time will prove me right.
By the way, I keep some ZNH at 15.5. A heavy loss for me because I ignored the dramatic sentiment coming from HK market. But I still have confidence in it. Long live ZNH.
I watched ZNH for about 9 months. I thought 19, 16, 14, 12, 10, 8 were the bottoms respectively--you can see that I was wrong 5 times, hopefully not the sixth! The bottom connects to HSI, if HSI breaks down to 8,000- again, ZNH could break its 7.75 low! H-shares and red-chips were too hot in late 1996 to Aug 1997, they were over-valued and considered diamonds, now they were under-valued and seemed to be junks to HK investors.
think about this: the chance of geting 50% and lossing 50%. you definitely have more chance to get more 50% in a short term than lossing 50% at this very cheap price. I expect znh will go up to 12 in two weeks. the reasons are: 1 Chinese REM will not devaluate. Chinese leader has promise again and again! 2. GDP will grow about 8% this year which is much higher than USA. 3. fundemendl performance is not change and expect to grow this year. most of bussiness of znh is domestic carry, china gdp go up, znh go up. 4. with PE is so low,only 4 as today, you have great chance to win.
as a matter of fact, I bought znh at 15 5/8, and bought at 13 5/8 and bought at again at 8 5/8, if znh go down i will buy it again. I feel confident znh will go up to pE 7-8 soon with asia market gradually stable.
I hope you are right. I just bought some at $13. And I regret now. ZNH has faced with domestic airline market slowdown and international market (southasia) turmoil. If you read Wall Street journal (Asia version), you will find almost all southasian based airlines have cut their routes because of the dramatic decreaseing number of passangers. The next earning report form ZNH will tell you what is meaning of P/E -- if ZNH lose money, how do you calculate the P/E ? In the short term, China may hold RMB. In the long term, RMB will be devalued. If you treat ZNH as a long term investment, it is against you in term of currency risk. The foreign investment to china has dried up because of the turmoil. Due to reorganization of state-owned enterprises, the cost-cuting programs will dominate the reforms -- that means less passangers in domestic market. Airline companies usually are interest rate sensitive because of the debt. China very likely raise its interest rate since HK has so high interest rate (10-15%). If china want to support HK and hold RMB, it has to raise interest rate. or it will let HK dollar unpegged or devalue RMB. Personally, I think ZNH will fall below $5 if its next earning report is bad, which is very, very likely.