Contents
Investment Case............................................................................................................................................................................... 4
The High P/BV Multiple Riddle ........................................................................................................................................................ 6
China Aviation – Strong Traffic Growth vs. Marginal Profitability................................................................................................ 9
Current Competitive Dynamics..................................................................................................................................................... 12
China Air Cargo Market ................................................................................................................................................................. 20
Strategies to Profit from the Industry........................................................................................................................................... 23
Company Research......................................................................................................................................................25
China Eastern Airlines: Locking in the Gains; Difficult to Sustain Current Valuation.............................................................. 27
Financial Summary, 2004-08E......................................................................................................................................................... 28
Bull and Bear Case Scenario Analysis ............................................................................................................................................. 29
Investment Case .............................................................................................................................................................................. 30
China Southern Airlines: Earnings Recovery Priced In............................................................................................................... 39
Financial Summary, 2004-08E......................................................................................................................................................... 40
Bull and Bear Case Scenario Analysis ............................................................................................................................................. 41
Investment Case .............................................................................................................................................................................. 42
Air China Limited: Strong Fundamentals in the Price ................................................................................................................. 51
Financial Summary, 2004-08E......................................................................................................................................................... 52
Bull and Bear Case Scenario Analysis ............................................................................................................................................. 53
Investment Case .............................................................................................................................................................................. 54
Cathay Pacific Airways: Passenger Yield on Uptrend; Raising Price Target ............................................................................ 61
Financial Summary........................................................................................................................................................................... 62
Risk-Reward Snapshot: Cathay Pacific Airways ............................................................................................................................... 63
Investment Case .............................................................................................................................................................................. 64
TravelSky Technology: Defensive Option on Secular Aviation Demand in China .................................................................... 71
Financial Summary 2004-08E .......................................................................................................................................................... 72
Risk-Reward Snapshot: TravelSky Technologies ............................................................................................................................. 73
Investment Case .............................................................................................................................................................................. 74