Thursday, 20 August 2015

A few thoughts and readacrosses from Asian corporate results #1

With an overload of China/Asia macroeconomic insights, how about some read across from Asian companies?

Cathay Pacific - this one caught my eye as a year ago I noted:

'...the stock trades sub book (x0.95)...A year ago I concluded that a Cathay Pacific share price sub book was an opportunity in times of strife and looking at the one year chart above that is below HK$14.  As with many airlines volatility is your friend / nudge to buy the shares'

And look where we are now...back in the US$14s.  Interesting - it sees to like an August 'run' down to this level based on the last 3 years or so.  

Of course the recent H1 numbers were better although the inevitable lower fuel costs were slightly counterbalanced by higher staff, landing and depreciation costs (as well as fuel hedging costs).  Still a good advance year-on-year as reported. 

No problems with passenger load...

...but cargo loads perhaps show the inevitable correlation with Asian/global trade and business realities.  Clearly this is the big fear underlying the stock at the moment.  

My view on the stock is that to buy it below book (< HK$14) remains a level of interest especially with the current high baked in negative sentiment. 

China Mobile 

Been a while since I have looked at this one but the shares in China's inaugural mobile company (as with China Unicom and China Telecom majority owned by the Chinese government making an investment inevitably deeply political).  

However the results did say something to me - and that is not that operating profit slightly surprised to the upside...but that mobile data traffic growth was so strong: 

And why is this?  Well as with any telecoms company at the moment this is centred on the growth of 4G...

...and that makes me think about mobile data company again.  Nokia due to their ongoing merger with Alcatel Lucent and the resulting self-help has been my favourite...and the stock is back around 1 year lows again:

That's interesting. 

Finally the Macau casino company Galaxy Entertainment unsurprisingly had a poor set of numbers (augmented apparently by some bad luck on the tables!)...

...although they continue to build their Macau portfolio (and so weaken their balance sheet).

The shares are trading near a 3 year low and a low/mid teens EV/ebitda rating - not classically cheap. However this is a macro sentiment play - just think what the rating change would be if earnings just went back to their 2013-14 trajectory...  My view on Galaxy: am watching with interest but no position at the moment.

A second part with thoughts on some financial and logistical companies will follow later.  

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