SEHK:753

Stock Analysis Report

Executive Summary

Air China Limited, together with its subsidiaries, provides air passenger, air cargo, and airline-related services in Mainland China, Hong Kong, Macau, Taiwan, Europe, North America, Japan, Korea, the Asia Pacific, and internationally.

Rewards

Trading at 20% below its fair value

Earnings are forecast to grow 18.76% per year

Earnings grew by 21.4% over the past year

Risk Analysis

No risks detected for 753 from our risk checks.


Snowflake Analysis

Undervalued with solid track record.


Similar Companies

Share Price & News

How has Air China's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 753 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.4%

753

-0.4%

HK Airlines

1.6%

HK Market


1 Year Return

2.9%

753

0.1%

HK Airlines

6.0%

HK Market

Return vs Industry: 753 exceeded the Hong Kong Airlines industry which returned 2.3% over the past year.

Return vs Market: 753 underperformed the Hong Kong Market which returned 6.5% over the past year.


Shareholder returns

753IndustryMarket
7 Day-1.4%-0.4%1.6%
30 Day-0.8%1.0%4.5%
90 Day11.3%2.4%8.8%
1 Year4.6%2.9%2.3%0.1%9.9%6.0%
3 Year49.9%42.9%6.3%0.6%27.7%14.7%
5 Year14.9%6.1%2.1%-7.1%21.7%1.4%

Price Volatility Vs. Market

How volatile is Air China's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Air China undervalued compared to its fair value and its price relative to the market?

24.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 753 (HK$7.88) is trading below our estimate of fair value (HK$9.85)

Significantly Below Fair Value: 753 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 753 is good value based on its PE Ratio (13.5x) compared to the Airlines industry average (15.3x).

PE vs Market: 753 is poor value based on its PE Ratio (13.5x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 753 is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: 753 is good value based on its PB Ratio (1.1x) compared to the XA Airlines industry average (1.3x).


Next Steps

Future Growth

How is Air China forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

18.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 753's forecast earnings growth (18.8% per year) is above the savings rate (1.6%).

Earnings vs Market: 753's earnings (18.8% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: 753's earnings are forecast to grow, but not significantly.

Revenue vs Market: 753's revenue (7.2% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 753's revenue (7.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 753's Return on Equity is forecast to be low in 3 years time (10.2%).


Next Steps

Past Performance

How has Air China performed over the past 5 years?

7.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 753 has high quality earnings.

Growing Profit Margin: 753's current net profit margins (5.2%) are higher than last year (4.5%).


Past Earnings Growth Analysis

Earnings Trend: 753's earnings have grown by 7.5% per year over the past 5 years.

Accelerating Growth: 753's earnings growth over the past year (21.4%) exceeds its 5-year average (7.5% per year).

Earnings vs Industry: 753 earnings growth over the past year (21.4%) exceeded the Airlines industry -5.2%.


Return on Equity

High ROE: 753's Return on Equity (8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Air China's financial position?


Financial Position Analysis

Short Term Liabilities: 753's short term assets (CN¥24.6B) do not cover its short term liabilities (CN¥75.4B).

Long Term Liabilities: 753's short term assets (CN¥24.6B) do not cover its long term liabilities (CN¥111.9B).


Debt to Equity History and Analysis

Debt Level: 753's debt to equity ratio (38.7%) is considered satisfactory.

Reducing Debt: 753's debt to equity ratio has reduced from 105.6% to 38.7% over the past 5 years.

Debt Coverage: 753's debt is well covered by operating cash flow (93.7%).

Interest Coverage: 753's interest payments on its debt are well covered by EBIT (4.7x coverage).


Balance Sheet

Inventory Level: 753 has a high level of physical assets or inventory.

Debt Coverage by Assets: 753's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

What is Air China's current dividend yield, its reliability and sustainability?

1.50%

Current Dividend Yield


Dividend Yield vs Market

company1.5%marketbottom25%2.2%markettop25%6.0%industryaverage2.1%forecastin3Years2.3%

Current dividend yield vs market & industry

Notable Dividend: 753's dividend (1.48%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 753's dividend (1.48%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 753 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 753 has only been paying a dividend for 9 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (20%), 753's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 753's dividends in 3 years are forecast to be well covered by earnings (19.7% payout ratio).


Next Steps

Management

What is the CEO of Air China's salary, the management and board of directors tenure and is there insider trading?

6.5yrs

Average management tenure


CEO

Zhiyong Song (54yo)

6yrs

Tenure

0

Mr. Zhiyong Song serves as the Chairman of Executive Board at Aircraft Maintenance and Engineering Corporation. Mr. Song has been the President of Air China Limited since January 28, 2014. He has been an E ...


CEO Compensation Analysis

Compensation vs Market: Zhiyong's total compensation ($USD0.00) is below average for companies of similar size in the Hong Kong market ($USD1.00M).

Compensation vs Earnings: Zhiyong's compensation has been consistent with company performance over the past year.


Management Age and Tenure

6.5yrs

Average Tenure

54yo

Average Age

Experienced Management: 753's management team is seasoned and experienced (6.5 years average tenure).


Board Age and Tenure

2.7yrs

Average Tenure

58yo

Average Age

Experienced Board: 753's board of directors are not considered experienced ( 2.7 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Feng Gang (56yo)

    Vice President

    • Tenure: 2.7yrs
  • Xiaohang Zhao (57yo)

    Chairman of the Supervisory Committee & VP

    • Tenure: 0.08yrs
    • Compensation: CN¥655.00k
  • Feng Xiao (51yo)

    Chief Accountant

    • Tenure: 5.5yrs
  • Mingyuan Wang (54yo)

    Vice President

    • Tenure: 8.9yrs
    • Compensation: CN¥697.00k
  • Zhiyong Song (54yo)

    Vice Chairman & President

    • Tenure: 6yrs
  • Chuanyu Xu (55yo)

    Chief Safety Officer

    • Tenure: 11yrs
    • Compensation: CN¥1.08m
  • Chongxian Ma (53yo)

    Vice President

    • Tenure: 9.8yrs
    • Compensation: CN¥881.00k
  • Hua Zhang (53yo)

    General Legal Counsel

    • Tenure: 2.4yrs
  • Tiexiang Liu (52yo)

    VP & COO

    • Tenure: 4.8yrs
    • Compensation: CN¥1.13m
  • Zhiyong Chen (55yo)

    Vice President

    • Tenure: 7.1yrs

Board Members

  • Stanley Hui (68yo)

    Independent Non-Executive Director

    • Tenure: 4.7yrs
    • Compensation: CN¥150.00k
  • Jianjiang Cai (55yo)

    Chairman

    • Tenure: 5.9yrs
  • Xiaohang Zhao (57yo)

    Chairman of the Supervisory Committee & VP

    • Tenure: 0.08yrs
    • Compensation: CN¥655.00k
  • Zhiyong Song (54yo)

    Vice Chairman & President

    • Tenure: 6yrs
  • Jianxiong Cao (59yo)

    Non-Executive Director

    • Tenure: 0.7yrs
  • Patrick Healy (53yo)

    Non-Executive Director

    • Tenure: 0.08yrs
  • Dajin Li (61yo)

    Independent Non-Executive Director

    • Tenure: 4.1yrs
    • Compensation: CN¥150.00k
  • Xiaokang Wang (64yo)

    Independent Non-Executive Director

    • Tenure: 2.7yrs
    • Compensation: CN¥60.00k
  • Deheng Liu (62yo)

    Independent Non-Executive Director

    • Tenure: 2.7yrs
    • Compensation: CN¥60.00k
  • Yasong Xue (57yo)

    Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥917.00k

Company Information

Air China Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Air China Limited
  • Ticker: 753
  • Exchange: SEHK
  • Founded: 1988
  • Industry: Airlines
  • Sector: Transportation
  • Market Cap: HK$139.333b
  • Shares outstanding: 14.52b
  • Website: https://www.airchina.com.cn

Number of Employees


Location

  • Air China Limited
  • No. 30, Tianzhu Road
  • Tianzhu Airport Economic Development Zone
  • Beijing
  • 101312
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AICA.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDDec 2004
753SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDDec 2004
AIRCLSE (London Stock Exchange)YesForeign Shares-Foreign ListedGBGBPDec 2004
AD2DB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURDec 2004
AD2WBAG (Wiener Boerse AG)YesForeign Shares-Foreign ListedATEURDec 2004
753SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDDec 2004
753SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDDec 2004
601111SHSE (Shanghai Stock Exchange)Domestic SharesCNCNYAug 2006
601111XSSC (Shanghai Stock Exchange - Shanghai - Hong Kong Stock Connect)Domestic SharesCNCNYAug 2006
AIRY.YOTCPK (Pink Sheets LLC)SPON ADRUSUSDJan 2007

Biography

Air China Limited, together with its subsidiaries, provides air passenger, air cargo, and airline-related services in Mainland China, Hong Kong, Macau, Taiwan, Europe, North America, Japan, Korea, the Asia Pacific, and internationally. It operates through Airline Operations and Other Operations segments. The Airline Operations segment offers air passenger and air cargo services. The Other Operations segment provides aircraft engineering, airport ground handling, and other airline-related services. The company is also involved in import and export trading activities; and the provision of cabin, airline catering, air ticketing, human resources, aircraft overhaul and maintenance, and financial services. As of December 31, 2018, it had 669 passenger aircraft. The company was founded in 1988 and is headquartered in Beijing, the People’s Republic of China. Air China Limited is a subsidiary of China National Aviation Holding Company. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/18 12:41
End of Day Share Price2020/01/17 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.