China Southern Airlines Company Limited (ZNH)
Chart Events
Performance Outlook
| Previous Close | 28.33 |
| Open | 28.93 |
| Bid | 28.88 x 900 |
| Ask | 29.18 x 800 |
| Day's Range | 28.84 - 29.23 |
| 52 Week Range | 18.45 - 35.60 |
| Volume | 12,838 |
| Avg. Volume | 26,527 |
| Market Cap | 12.273B |
| Beta (5Y Monthly) | 1.86 |
| PE Ratio (TTM) | 12.92 |
| EPS (TTM) | 2.25 |
| Earnings Date | N/A |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | Jun 28, 2019 |
| 1y Target Est | 183.08 |
Fair Value
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- South China Morning Post
China's largest carrier is back buying aircraft as Southern Airlines sells bonds to fund its order of Airbus' narrow-body jets
China Southern Airlines, operator of the country's biggest aircraft fleet, is back in the market buying new planes and engines, resuming its expansion mode after putting six months of an air travel slump behind it.The carrier is issuing up to 16 billion yuan (US$2.37 billion) of convertible bonds, using two-thirds of the proceeds to buy 11 planes, components and towards maintenance. The remainder of the funds raised will be used to buy back-up engines and replenish its liquidity, according to a statement by the airlines, based in the Guangdong provincial capital of Guangzhou.China Southern plans to add two types of narrow-body jets to its fleet of 857 aircraft, booking two A319neo and nine A321neo planes from Airbus. The 11 new planes are expected to add 1.9 billion yuan in annual revenue, China Southern said.Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China."Having more narrow-body aircraft is the future direction as large aircraft are proved not efficient enough, " said Toliver Ma, analyst at Guotai Junan in Hong Kong. "As more newly added routes will be short distance or regional, airlines need smaller aircraft given the demand for such routes in China still have room to develop."File picture of an Airbus A321neo aircraft in flight. NEO stands for "new engine option." alt=File picture of an Airbus A321neo aircraft in flight. NEO stands for "new engine option."The expansion by China Southern, which flies to 243 destinations in mainland China and around the world, follows the solid recovery during the "golden week" of the nation's national day in October, the longest public holiday since the coronavirus pandemic broke out in January.Even though the aggressive 'fly-at-will' promotion packages have boosted airlines' revenue, many of them are still flying international routes - the most profitable destinations - at 10 per cent of their 2019 capacity, which compels them to tap the capital markets for capital.File picture of an Airbus A319neo aircraft. alt=File picture of an Airbus A319neo aircraft.China Southern, the sole operator among Chinese carriers of the A380 super jumbo by Airbus, said it's aiming to grow into "an carrier with international scale and network," to leverage on the potential of an aviation market where the capacity to carry passengers may grow to 1.5 billion by 2036, and the growth prospect of its home base the Greater Bay Area.The use of the Airbus single-aisle aircraft would make up for the capacity of the 24 Boeing 737 MAX narrow-body jets grounded in China Southern's fleet. The carrier was one of the first to ground the aircraft last year, following two back-to-back crashes within five months involving the latest version of what Boeing called the "most popular jet aircraft of all time"."China Southern is aiming to restructure its fleet," said Li Hanming, an independent aviation consultant and founder of Li & Li Consultancy in Chicago. "Because the business of its domestic routes is quite stable, there's room to buy new planes."Boeing 737 MAX aircraft bearing China Southern's livery parked in a line at Urumqi airport, in China's western Xinjiiang region on June 5, 2019. Photo: AFP alt=Boeing 737 MAX aircraft bearing China Southern's livery parked in a line at Urumqi airport, in China's western Xinjiiang region on June 5, 2019. Photo: AFPAround 40,000 American airline workers were furloughed in early October in the absence of extra government financial aid, after bankruptcies of some carriers such as Miami-based Miami Air International. According to the International Air Transport Association (Iata), global airlines need between US$150 billion and US$200 billion in financial bailout, while the Airlines for American trade group said in March that US carriers would need US$58 billion in aid.China Southern's domestic passenger capacity rose 6.6 per cent in September from last year, despite a 90 per cent plunge in its international market, according to a filing on Wednesday. Its domestic passenger volume rose 1.6 per cent from a year ago, while passenger load factor was still down in both domestic and international markets.The convertible bond issuance could also be part of the capital injection from parent China Southern Air Holding Company or state-owned entities which pledged to inject 30 billion yuan in the state-controlled carrier's mixed-ownership reform, said Li.In 2019, the State-owned Assets Supervision and Administration Commission (Sasac), as well as Guangdong Hengjian Investment Holding, Guangzhou City Construction Investment Group, Shenzhen Penghang Equity Investment Fund signed the investment agreement. China Southern said it would use the capital to invest in its aviation business and serve China's Belt and Road Initiative (BRI) and Greater Bay Area (GBA) development.China Southern's expansion move could give hope to plane makers which have been hit hard by the slump in global travel. Euler Hermes under Allianz predicted earlier this week that new plane deliveries of Airbus and Boeing will drop by 57 per cent and 26 per cent in 2020 and 2021.SCMP Graphics alt=SCMP GraphicsThis article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
- Reuters
Cheap seats give Chinese airlines a much-needed passenger bounce
Looking to travel from Beijing to Hangzhou in eastern China? Led by China Eastern Airlines Corp's <600115.SS> June offer of unlimited weekend flights until Dec. 31 for 3,322 yuan ($485), domestic carriers have fallen over themselves to woo passengers back with bargain-basement fares. At the same time, China's success in mitigating the spread of the coronavirus has helped consumers regain the confidence to travel.
- Bloomberg
Oil Prices Face a Chill Autumn Wind
(Bloomberg Opinion) -- As the summer driving season fades in the rearview mirror, oil markets are taking on a distinctly chilly air.The recovery in demand has officially stalled, just as the OPEC+ countries are starting to taper their record output cuts. With spare capacity rife throughout the supply chain and huge stockpiles of crude and refined products, it may be some while yet before oil prices resume their upward path.After a strong initial rebound from the depths of the pandemic-induced slump, the comeback in demand slowed dramatically, as I’ve written here and here. This is most obvious in those countries that publish detailed data at high frequency, such as the U.S., the U.K. and some other European nations.That oil demand in India remains muted is particularly bad news for those wishing oil prices higher. Before Covid-19 struck, it had joined China as one of the major centers of growth in liquid fuel consumption. Sales of transport fuels by the country’s three biggest fuel retailers — Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. — were still down year-on-year by more than 20% in July and August.The one potential bright spot is China, which may yet prove a lifeline for the flagging demand. July’s apparent oil use in the world’s biggest importer was up by a whopping 19.5% year on year, according to Bloomberg calculations on data from the nation’s Customs General Administration. Air travel in the country’s vast domestic market is picking up. Passenger numbers for China’s biggest airlines — Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co. — were up by about 25% month on month in July. Travel analytics company ForwardKeys predicts air travel in China will fully recover this month. But China’s already got plenty of oil on hand. It took advantage of rock-bottom prices in March and April to make purchases, leaving the country’s stockpiles brimming, both on land and in tankers anchored off its coast. The volume in so-called floating storage is coming down, but there are still some 50 million barrels of crude that have been in tankers off China’s Shandong province for more than 15 days, according to London-based consultants Energy Aspects.Even when demand does begin to pick up again, in China or elsewhere, there may be little immediate impact on crude prices. The devastation wrought by the coronavirus pandemic has left ample spare capacity throughout the oil supply chain.Take the U.S., for example. Refinery utilization was running at about 81% of operable capacity before Hurricane Laura tore through Louisiana. That compares with about 95% at the same time last year. The difference represents about 2.6 million barrels a day of idle refinery capacity in the U.S. alone. Plants in Europe may be running at even lower levels.When it comes to getting oil out of the ground, the spare capacity may be even bigger.While U.S. shale oil production may never recover fully to its pre-virus peak, there is still plenty of room for output to pick up from current depressed levels. In the seven shale basins covered by the Energy Information Administration’s Drilling Productivity Report, there were still more than 7,600 drilled but uncompleted wells at the end of July, a number that has barely changed since February. That may reflect a lack of activity in the shale patch, but the wells provide a buffer from when demand picks up to the point that drilling crews return to the Permian and other shale basins.But the greatest concentration of spare crude production capacity lies far away in the Persian Gulf and beneath the tundra of northern Russia. The OPEC+ group of 23 countries had reduced their collective production by 9.7 million barrels a day as of May. They’ve since begun easing back on those cuts, raising the combined output target by 2 million barrels a day from the start of August.Some of that should initially be offset by several countries’ commitments to additional reductions after failing to meet their obligations in full in the early months of the deal. More oil will also be consumed domestically in the Persian Gulf countries to meet soaring summer electricity demand. But neither of those factors will constrain supply for long.Saudi Arabia’s hard line towards OPEC’s perennial quota cheats succeeded in eliciting promises to make up for earlier shortcomings, but Iraq, the biggest over-producer, is seeking to reduce the severity of its compensatory cuts by extending their duration. And Persian Gulf electricity demand will soon retreat from summer peaks, as temperatures come down, freeing up more of the extra production to be exported.The chill of approaching autumn may yet make itself felt through oil markets before they rebalance.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
