Favourable Operating Environment, Upgrade to Outperform

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1 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Equity Research 股票研究 : Aviation Toliver Ma 马守彰 行业报告 : 航空 toliver.ma@gtjas.com.hk Favourable Operating Environment, Upgrade to Outperform 经营环境良好, 上调至 跑赢大市 行 业 报 告 证 券 研 究 报 告 航空行业 Equity Research Report Overall operating environment for Chinese airlines is expected to stay strong. Our investment thesis includes 1) stable revenue growth - we expect airlines revenue are set for stable growth as China continues to be the dominant force in global air traffic due to continuous improvement in economic and social conditions; 2) strong government support - we expect the industry is supported by the government with targets to increase the number of airports and aircraft in the next 5 years; and 3) stable oil price and RMB rate - we foresee a more stabilized oil price and much lower foreign exchange risk compared to previous years, and we should see less volatile bottom line movement. We believe the outlook is more positive than ever, with solid air travel demand along with improving fundamentals in the sector. The sector is currently trading at 1.2x PBR aligning with the 5-year historical mean. We think the valuation is undemanding and has room for further valuation upgrade considering a much more positive outlook. We therefore upgrade sector rating to Outperform. We set Air China (00753 HK) as our top pick on the back of superior yield management and profitability. Air China has demonstrated a strong track record on passenger yield and operating profit. We believe AC will be a major beneficiary from the continuous reform in ticket pricing, which will lead to a strong bottom line. Maintain Accumulate rating, and revise up TP to HK$10.27, representing 13.4x 2017 PER, 13.1x 2018 PER, 1.5x 2017 PBR and 1.3x 2018 PBR. 中国航司整体经营环境预计保持强劲 我们的投资主题包括 :1) 收入稳定增长 - 我们预 计航司收入增长趋稳, 随着经济和社会的不断进步, 我们认为中国将继续保持全球航空运 输的主导力量 ; 2) 强而有力的政府支持 - 我们预计该行业将得到政府的支持, 在接下来的 五年计划中计划新增机场和飞机 ; 以及 3) 稳定的油价和人民币汇率 - 我们预计较前几年 相比, 油价将更加稳定, 外汇风险将更低, 净利润的波动应当减少 航空旅行需求强劲, 行业基本面改善, 我们相信前景比以往更乐观, 目前行业的市净率为 1.2 倍, 与 5 年的历史均值相符 我们认为估值不会过高, 考虑到前景更加乐观, 未来仍 有估值提升空间 因此, 我们将行业评级上调至 跑赢大市 我们的行业首选为中国国际航空 (00753 HK), 因其优秀的收益管理和盈利能力 国航在 客运收益和营业利润方面表现出色 我们认为国航在持续的票价改革中将是主要受益者, 这将带来强劲的盈利 维持 收集 评级, 并价上调目标价至 港元, 分别对应 13.4 倍 2017 年市盈率 13.1 倍 2018 年市盈率 1.5 倍 2017 年市净率和 1.3 倍 2018 年市净率 Rating: Outperform Upgraded 评级 : 跑赢大市 ( 上调 ) Sector Relative Price Performance % of return Source: Bloomberg. Sector Valuation Source: Bloomberg. Big 3 WA 52w return Hang Seng Index 52w return China aviation 12M forward PB Company Name Code Price Rating 17 PER 18 PER 19 PER 17 PB 17 ROE 17 Yield 公司名称编号股价投资评级市盈率市盈率市盈率市净率净资产收益率股息率 (HK$) (x) (x) (x) (x) (%) (%) Air China HK Accumulate China Eastern Airlines HK Neutral Weighted Average 市值加权平均 Outperform Source: Bloomberg, the Companies, Guotai Junan International. See the last page for disclaimer Page 1 of 22

2 Table of Contents Industry Overview Air Traffic... 3 Investment Thesis... 5 Aviation Revenue Set for Faster Growth... 5 Favourable Government and Regulatory Support... 6 Stable Oil Price and Foreign Exchange Risk... 8 Fundamental Outlook Sector Valuation and Stock Pick Company Report: Air China (00753 HK) Company Report: China Eastern Airlines (00670 HK) Appendix 1 Summary of Changes Appendix 2 China Big 3 Carriers Operating Summary See the last page for disclaimer Page 2 of 22

3 Industry Overview Air Traffic Constant growth in global passenger traffic driven by emerging markets in Asia Pacific. Globally, the worldwide air traffic has grown healthily; with yoy growth for the past 5 years averaged at 6.2%, according to Boeing report One key reason was the better economic environment in terms of GDP and income growth, contributed by emerging markets such as China and India. No doubt that GDP remains an important driver and indicator for air transport, but the aviation industry is a dynamic industry where economic and social factors also continuously shape the market landscape. These emerging markets not only have fast economic growth, but also rising middle class demographic with growing disposable income to spend on consumer products. In particular, this will be associated with spending in travel and tourism. In 2016, international tourist arrivals grew by 3.6% according to World Tourism Organisation, and this trend is expected to grow. To facilitate the growing air travel demand, regulatory environment, infrastructure investment and liberalization in emerging markets are key, and we think China is focusing on all three areas. Figure-1: Top 20 Airports Comparison Source: Boeing report 2017, Guotai Junan International. China will continue to be the key driver for global air traffic growth. China is a major contributor for the growth in both regional and global level, where air service and passenger numbers are growing rapidly. Chinese domestic air traffic has grown 4-fold in the last 10 years with international traffic more than double. China has contributed significantly to the world traffic growth for several years, as its passenger growth increased at an average rate of more than 10% per year. This has led to China being able to consistently grow faster than global average. Looking ahead, despite a slowing GDP, China is expected to remain as key driver due to the consumption upgrade trend and its transition to a service / domestic consumption economy. Government has reiterated its stance on supporting China aviation industry. In the next 5-year plan (13 th 5-year plan), China aims to increase general aviation market size to reach trillion through building more airports, introducing more aircrafts and increasing flying hours. In recent development, National Development department and CAAC published a notice on coordinated development of the Beijing, Tianjin, and Hebei region, where both the old and new Beijing airports will act as key aviation hubs. Figure-2: China RPK RPK, in billions China - China China - Europe China - North America China - Northeast Asia China - Oceania China - Southeast Asia 4,000 3,500 3,000 2,500 CAGR 5.8% 2,000 1,500 1, F Source: Boeing report 2017, Guotai Junan International. See the last page for disclaimer Page 3 of 22

4 Strong outbound demand expected. In 2016, with income growth and tourist consumption upgrade, as well as visa, flight and other convenient factors, China s outbound tourism continued to grow. The number of China s outbound tourists reached million in 2016, increasing by 5.7% yoy. Despite the growth rate is the slowest in the last 7 years, we believe one reason is due to the increasing high base, with an astonishing number of outbound tourists well exceeded the population of Japan (127 million). We expect outbound demand is still strong and will continue to grow as China's current outbound tourists are still less than 10% of the country's total population. Also, according to China Tourism Academy ( CTA ), only 10% of the Chinese population own passports suggesting huge potential in China s outbound travel market. China's travel pattern will favour air traffic growth. China s two longest holiday is the Lunar New Year and the 10.1 National Holiday. There tends to be a growing trend of families opting to spend their money aboard, instead of staying put for traditional celebrations. Although this trend appears more obvious in the big four cities (Beijing, Shanghai, Guangzhou and Shenzhen), the impact is significant to air travel as Shanghai, Beijing, Guangzhou and Shenzhen are the four main doors from China to the outside world, according to CTA. We believe this will significantly boost airlines load factors with near full-loads estimated during those holiday seasons. In 2017 New Year, 58.5 million people travelled, representing a 13% yoy increase from 2016; and approximately 483,000 flights executed, up 14.8% yoy, according to Civil Aviation Administration of China ( CAAC ). On the other hand, 10.1 National Holiday is another important vacation period, and approximately 710 million people travelled in this year holiday (1-8 Oct.), in which outbound travel was about 13 million, representing about 10% yoy increase. Mostly, Asian countries remain the hottest destination such as Thailand, Japan and South Korea while the United States ( US ), United Kingdom ( UK ) and France is among the most popular long-haul destinations. From this year Chinese New Year, we believe there is a trend of going further abroad, with US and Australia exhibited fastest growth in the Top 10 routes (See table 3). Canada, New Zealand and Russia are also growing fast, showing double digit growth. Not to overlook strong domestic travel. For most Chinese travellers, domestic travel was the largest segment, especially during Golden Week. About 59% of searches on Trivago were for domestic destinations, fitting in the trend of a pick-up in domestic travel. Domestic trips made by Chinese tourists increased 13.5% in the first half, exceeding the 5.1% rise in overseas travel recorded in the same period. We believe one main reason is convenience, as supply of international flights were not able to keep up with the demand growth and ticket prices are expensive without advance planning, leading to increased interest in domestic alternatives. Meanwhile, safety is also one of the key concerns for travellers who opt not to travel to US and Europe due to higher terrorist threat. Figure-3: China Domestic Outbound Traveller Figure-4: China inbound and outbound traffic Domestic Outbound Traveller yoy % 60% mn 30 China inbound and outbound traffic Overall yoy Domestic yoy Regional yoy International yoy 60% % 40% 20 40% % 20% 20% % 0% 10 0% 0-10% % Source: CAAC, Guotai Junan International. Source: CAAC, Guotai Junan International. Table-1: 2017 Chinese New Year Popular Routes Rank Flights Growth China - Thailand 97% 25% -5% 2 China - Japan 52% 39% 7% 3 China - South Korea 50% 6% 2% 4 China - Hong Kong -6% 2% -9% 5 China - Taiwan 13% 15% -13% 6 China - US 14% 39% 26% 7 China - Australia -1% 44% 23% 8 China - Singapore 0% 11% 18% 9 China - Macau -1% 9% 4% 10 China - Vietnam -14% 57% 74% 11 China - Malaysia n.a. n.a. 39% 12 China - Canada n.a. n.a. 54% 17 China - New Zealand n.a. n.a. 31% 23 China - Russia n.a. n.a. 40% Source: CAAC, Guotai Junan International. See the last page for disclaimer Page 4 of 22

5 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec Investment Thesis Aviation Revenue Set for Fast Growth Chinese airline s revenue growth roughly moving in-line with GDP growth. Airline revenue was on growth region for the past 16 years except in 2003, and exhibit close relationship with GDP growth with more volatile in yoy changes. As discussed in previous section, strong income growth and improved economic condition in the past decade has benefited China aviation industry underpinned by strong domestic and outbound tourism. Air travel is becoming achievable and as a consumption upgrade in China, in which air passenger turnover proportion was rising since The proportion reached 30% in Oct. 2017, and has doubled within the last four years; implying accelerating air travel demand. Looking ahead, aviation will continue to be a key industry as part of China internationalization strategy and GDP growth are likely to be more stabilized under the next 5-year plan, therefore, we think aviation revenue growth should continue in a stable manner. Figure-5: Chinese Airline Revenue and GDP Growth Figure-6: Chinese Airline RPK and GDP Aviation sector revenue growth GDP growth Aviation sector revenue growth RPK 25.0% 45.0% 40.0% 20.0% 35.0% 15.0% 30.0% 25.0% 10.0% 20.0% 15.0% 5.0% 10.0% 5.0% 0.0% 0.0% -5.0% -5.0% -10.0% Source: CAAC, National Bureau of Statistics, Guotai Junan International. Source: CAAC, Guotai Junan International. Figure-7: Air Passenger Turnover Proportion 35.00% Figure-8: China Disposable Income per Capita RMB Disposable Income per Capita (Urban) yoy 30.00% 40,000 20% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 35,000 30,000 25,000 20,000 15,000 10,000 5,000 18% 16% 14% 12% 10% 8% 6% 4% 2% 0 0% Source: CAAC, Guotai Junan International. Source: National Bureau of Statistics, Guotai Junan International. Yield improvement expected. As a healthy and stable GDP growth is expected, we believe downside risk for airline revenue are limited unless the occurrence of significance macro event. There are strong trend showing passenger yield (yield per RPK) are on a recovery trend and could expect for a yoy growth for most airline as soon as Yield improvement is expected after supply and demand are in balance. In the previous few years, strong capacity investments are carried out for most airlines including the big three carriers (Air China AC, China Eastern Airlines CEA and China Southern Airlines CSA ), particularly driven by international routes expansion. ASK was consistently in double digit monthly growth in 2015 and 2016, when Chinese airlines were filling up routes to North America and Europe. The fast industry expansion negatively impacted ticket price as supply growth accelerated, thus passenger yield suffered large yoy decline in 2015 and In the future, as being noticed, capacity growth slowed down as routes to popular destinations are saturated, airlines optimised flight and fleet allocations, and as a result passenger yield turnaround, recording a slower yoy decline in 1H17 (for listed companies), with AC able recorded slight yoy growth. When yield improved, this will provide strong foundation for revenue growth in the future. See the last page for disclaimer Page 5 of 22

6 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Figure-9: Big Three Carrier ASK Growth Figure-10: Big Three Carrier International ASK Growth 25% CSA AC CEA 25% CSA AC CEA 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% Source: the Companies, Guotai Junan International. Source: the Companies, Guotai Junan International. Figure-11: Listed Airlines PLF Figure-12: Listed Airlines Passenger Yield CEA AC CSA Hainan Juneyao Spring 20% CEA AC CSA Hainan Juneyao Spring % % 5% 0% % % % -20% Source: the Companies, Guotai Junan International. Source: the Companies, Bloomberg, Guotai Junan International. Favourable Government and Regulatory Support Infrastructure investment to support growth. Infrastructure has also been a key area for investment to support the aviation industry. To cope with future growth, China has been highlighting the importance of strengthening the development of the aviation industry in the past few years and tops as one of the national priorities. The reason is obvious as key airports are already working in full capacity. In 2016, seven China airports (excluding Hong Kong and Taiwan) rank among top 50 busiest airports in the world, with Beijing Capital International Airport came second and Shanghai Pudong Airport rank ninth. In May 2016, executive meeting of State Council demands the speed up in aviation infrastructure and opening up of air resources. The above strategy was also further echoed by CAAC, the National Development and Reform Commission and the Ministry of Transport in this year "13th Five-Year Plan for the Development of China's civil aviation". According to China s 13th Five Year Plan ( ), China will have more than 260 civil airports by By 2020, China plans to have 500 general aviation airports and more than 5,000 general aviation aircraft. Figure-13: Airport Additions by Region Figure-14: Routes Growth 8.00 Northeastern East West Central 40.0% Overall Domestic International Regional % % % % % % Source: CAAC, Guotai Junan International. Source: CAAC, Guotai Junan International. See the last page for disclaimer Page 6 of 22

7 China's limited airspace remains the largest challenges for growth. In China, airspace is tightly controlled by the Chinese military and the airspace classification system does not segment out its general aviation air activities. Strict military control over roughly 70% of all Chinese airspace is the largest single factor limiting growth of this industry. While in US, about 80% airspace are open for civil use. In May 2017, Chinese regulators submitted proposal of new airspace management system to cope with flight delays and boost aviation growth. The new system would integrate management of civil and military aviation and broaden flight corridors in key traffic hubs, including Beijing, the Pearl River Delta and the Yangtze River Delta, according to government official. Despite slow progress, we believe the need to open up airspace is urgent and critical to support the aviation industry, especially when more airports are expected in the next few years. Figure-15: Routes Occupation Comparison between China (Left) and US (Right) Source: Google earth. Opening up of pricing system to improve airlines profitability. The domestic air ticket pricing system is highly regulated in China despite opening up gradually. Only about 724 routes are priced under market adjusted mechanism, which is less than 30% of total available routes. One major policy initiated in 2015 map out the timeline of opening up the pricing system, in which 1) by 2017, competitive domestic route will mostly be market-adjusted instead of government-guided; and 2) by 2020 the pricing mechanism will be fully determined by market forces (see table 2 for major notices). With three years left before full market pricing mechanism, we believe reform progress will hasten. We believe the opening up of the pricing system will benefit large carriers, as high passenger turnover routes are still highly under government guided price (see table 3). Currently, only 5 in top 20 routes are market adjusted. With big 3 carriers dominating the top 20 routes, the open up of pricing system should help increase passenger yield. Table-2: Major Notices on Domestic Air Ticket Pricing System Year Policy Description 2014 Notice on Improving Domestic Transportation Fare Policy in Civil Aviation 完善民航国内运价政策的通知 1) Full autonomous on the control on the price of domestic civil air cargo transport; 2) Relax the control on the fare price of 101 short-distance flights between neighboring provinces which compete with main ground transportations; and 3) Price that continue to be guided by the government, are now determined and adjusted on the benchmark fare price according to related rules. Notice on Further Improving Domestic Transportation Fare Policy in Civil Aviation 关于进一步完善民航国内航空运输价格政策有关问题的通知 Further relax on the control on the ticket price of 101 short-distance flights under 600 km between neighboring provinces which compete with main ground transportations 2015 Execution Suggestions on Promoting the Reform of Fare Price and Pricing Mechanism for Civil Aviation 关于推进民航运输价格和收费机制改革的实施意见 To clarify that 1) by 2017, the prices and charges for civil aviation in the competitive routes will mostly be relaxed; 2) by 2020, pricing mechanism of domestic flights be mainly determined by market. Notice on Deepening the Reform of Fare Price of Domestic Air 1) Further expand the coverage of flights under market-adjusted price; 2) 2016 Passenger of Civil Aviation 关于深化民航国内航空旅客运输票价改革有关问题的通知 Price of flights within 800 km and those more than 800 km which compete with high-speed trains will be determined by airlines. Source: CAAC, Guotai Junan International. See the last page for disclaimer Page 7 of 22

8 Beijing-Shanghai Shanghai-Shenzhen Chengdu-Beijing Guangzhou-Shanghai Guangzhou-Beijing Beijing-Shenzhen Chengdu-Shanghai Shanghai-Xiamen Guangzhou-Chengdu XHBA- Kunming CQ-Shanghai Kunming-Beijing Shanghai-Xi'an Beijing-Xi'an Hangzhou-Beijing Guangzhou-Hangzhou Chongqing-Beijing Guangzhou- CQ Shanghai-Qingdao Chengdu-Shenzhen Table-3: Top 20 Routes Price Reference Route Government Guided Price (RMB) Market-adjusted Price (RMB) Beijing-Shanghai 1,240 Shanghai-Shenzhen 1,400 Chengdu-Beijing 1,690 Guangzhou-Shanghai 1,350 Guangzhou-Beijing 1,910 Beijing-Shenzhen 2,080 Chengdu-Shanghai 1,760 Shanghai-Xiamen 1,260 Guangzhou-Chengdu 1,430 Xishuangbanna-Kunming 1,670 Chongqing-Shanghai 1,550 Kunming-Beijing 2,550 Shanghai-Xi'an 1,390 Beijing-Xi'an 1,760 Hangzhou-Beijing 2,180 Guangzhou-Hangzhou 1,150 Chongqing-Beijing 1,640 Guangzhou-Chongqing 1,250 Shanghai-Qingdao 1,050 Chengdu-Shenzhen 1480 Source: CAAC, Guotai Junan International. Note: Market-adjusted price are referenced to Air China price search on 22 Dec Figure-16: Top 20 Routes Passenger Traffic 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Pax, in thousand Source: CAAC, Guotai Junan International. Stable Oil Price and Foreign Exchange Risk Oil price is expected to increase stably in 2018 and After witnessing the bottom out of oil price in 2016, the oil market is focusing on three main factors in 2017: 1) OPEC production cuts (known as the Declaration of Cooperation); 2) US production increase and cost reduction; and 3) oil demand to increase. Price in 2018 should be moving steadily upwards. As at the end of November, it was announced that the current level of cuts would be extended another nine months to the end of 2018, with Libya and Nigeria adding a promise not to raise their production. We believe the production cuts are supportive to oil price, as seen in the cuts announced last year, in coordination with Russia, which were then extended six additional months, seem to have helped start a re-balancing of the market and move price up to US$50 per barrel. However, when US production increases, we have seen the effectiveness of the production cuts being limited. Having said that, the production cuts has brought down inventory level and helped oil market slowly moving to equilibrium. In 1-3Q17, the stock draw came as global oil demand growth rose by 1.6 mb/d compared to the same period in 2016, outpacing the 0.7 mb/d net increase in global oil supply over the same period, with the increase in supply mainly coming from producer not in the production cuts (see figure 18), according to OPEC November 2017 report (OPEC report). As a result, the inventory surplus has reduced considerably. OPEC report compares current inventory level with five-year averages, and the difference has dropped from 183 mb in Jan to 154 mb in Sep. 2017, representing a decrease of 15.9%. Therefore, we believe the production cuts will continue to play an important role of sustaining the current price level in See the last page for disclaimer Page 8 of 22

9 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Figure-17: Jet fuel Price RMB / tonne 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Singapore Jet Fuel (LHS) Domestic jet fuel ex-factory price (LHS) Surcharge for no more than 800km (RHS) Surcharge for above 800km (RHS) Source: Bloomberg, Guotai Junan International. RMB / person Figure-18: Brent oil movement USD / barrel Brent Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Source: Bloomberg, Guotai Junan International. Figure-19: World Oil Demand and Supply (Average) 1-3Q17 vs 1-3Q16 Figure-20: OECD commercial oil inventories, difference to 5-year average Source: OPEC Report. Source: OPEC Report. Fuel cost continues to go up but will slow down. Cost structures were also volatile for airlines as oil price fluctuates more vigorously than before. When oil price started to plummet, average fuel cost ratio (fuel cost to total operating cost) also dropped and reached lowest of 21% in 1H16. In contrast, quick recovery of oil price in 2H16 has seen fuel cost ratio rise to 24% and 26% in 2H16 and 1H17 respectively. Consequently, this ratio should continue to rise in 2017F to 2019F. We have revised our oil price assumption after consulting our house oil and gas team, suggesting Brent oil should average at US$63 and US$68 a barrel in 2018 and 2019, respectively. Figure-21: Fuel cost per operating expense (average of big 3 carrier) % Source: Bloomberg, Guotai Junan International. See the last page for disclaimer Page 9 of 22

10 Dec 15 Feb 16 Apr 16 Jun 16 Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17 Dec 17 RMB has appreciated against USD in There are a few explanations. 1) Trump administration faces significant pressure in 2017, with a number of policies continue to see challenges. This has already created a foundation for USD to depreciate at the beginning of 2017; 2) fundamentals in the Euro zone has improved. Along with a stabilized political environment after the French presidential election, systematic risk has reduced significantly during the year, further pushing USD downwards. 3) Similarly, China has also reacted in late 2016 to tackle the capital outflow. The Chinese government introduced a number of measures which includes setting strict requirements for converting RMB into foreign currencies, introducing a counter-cyclical factor in its formula to arrive at the RMB reference rate, and further tightened its control over outbound investment, launching regulations that require regulatory approval for some foreign acquisitions conducted through offshore entity. Improving RMB settlement willingness. By analyzing the foreign exchange settlement rate (Foreign exchange settled by companies and individuals as a percentage of foreign-related foreign exchange income, or the foreign exchange settlement rate), average settlement rate up to Oct was 63%, better than 2016 s average of 60.1%. Despite the willingness to settle is benign, these represents improving signs of individual s willingness to hold RMB. On the other hand, foreign exchange settlements and sales by banks deficit narrowing to USD billion for 1-10M17, yoy decrease of 57.3%, and have recorded a surplus since Sep. 2017, indicating an improvement trend. In our view, RMB may fluctuate in the short term but has less room for depreciation. We believe the future of RMB lies on the future trend of USD. The sharp correction in the dollar in 2017 was a surprise to most market estimations. Currently US index is in a relatively low point in recent years, but we believe USD is dragged by the following forces. 1) Within US, we think the slow progress of the Trump administration will continue to pressure the U.S. dollar. There are still a few policies falling behind schedule. For example, medical reform, tax reform and infrastructure projects which will be a focus of the future. Despite Fed rate hike will speed up in the next few years, which is expected to have three increments in 2018, similar to 2017, we believe the relatively low inflation and the flattening yield curve will hinder dollar rally. 2) Out of US, the Eurozone economic recovery will be in a gradual pace, and the ECB normalizing monetary policy in 2018 may cause Euro to stay relatively strong. 3) In the recent China Central Economic Work Conference, the central government targets to maintain a proactive fiscal policy and keep monetary policy prudent and neutral as well as vowing to preserve the fundamental stability of the RMB exchange rate at a rational level. Therefore, we believe significant USD rebound is not likely, which is favourable to keep RMB stable. However, it should also be kept in mind on uncontrollable risk of the international market (whether political or financial) which could impact the volatility of RMB. Figure-22:RMB against USD and USD Index Figure-23: RMB Index 7.2 Mid-price Offshore Onshore USD index SDR basket CFETS BIS basket Source: The People s Bank of China, Bloomberg, Guotai Junan International. Source: China Foreign Exchange Trading System, Guotai Junan International. See the last page for disclaimer Page 10 of 22

11 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H Figure-24: Willingness of Settlement Figure-25: Foreign Exchange Settlements and Sales by Banks 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% USD billion foreign-related receipts and payments through banks foreign-related receipts and payments by banks Source: State Administration of Foreign Exchange, Guotai Junan International. Source: State Administration of Foreign Exchange, Guotai Junan International. Fundamental Outlook Improving signs for cost and operating profit. We have noticed improving efficiency in airline industry, especially the big three carriers. Looking at the cost per ASK (ex-fuel), it is trending downwards, signalling the continuous improvement in shrinking their cost structure or simply working more efficiently. Out of the big three carriers, both AC and CSA are operating much better than CEA in this case, due to their larger capacity which tends to yield better economies of scale. We also believe AC is better in fleet and flight operations as witnessed in its better passenger yield management. In terms of operating profit, we noticed the big three carriers are not as profitable in 2013 and 2014, as we think the decrease in ticket price has eroded profitability and the rise of low cost carrier such as Juneyao Airline and Spring Airline. However, as we believe passenger yield has bottomed out and should experience slight improvement as early as 2018, top line revenue should get better. Coupled with the improving cost efficiency, we expect operating profit per ASK to improve. Figure-26: Cost per ASK (ex-fuel) Comparison RMB (cents) CEA AC CSA Source: the Companies, Bloomberg, Guotai Junan International. Figure-27: Operating Profit per ASK Comparison RMB (cents) CEA AC CSA H13 1H14 2H14 1H15 2H15 1H16 2H16 1H Source: the Companies, Bloomberg, Guotai Junan International. Focus on large carriers. By analyzing the normalized profit growth (exclude extraordinary income / expense), we have noticed that large carriers were underperformers since 2H15, but started to outperform in 2H16 compared to low cost carriers ( LCC ) (see figure 26). Low fuel cost is one major supportive factor to the overall industry, in particular to LCC where they can further lower their price. However, this really rub salt into large carrier s wound when competition is already intense after rapid capacity expansion, resulting in low cost carriers better benefit from the low oil price environment, suggesting that a low oil price factor may not necessarily benefit all players in the industry. Further, LCC has a relatively low debt structure and lower USD exposure with operating lease a more common practice. This allows them to have a lower exchange loss compared to large carriers upon significant RMB depreciation since 2H15 to We believe the situation has changed as capacity expansion slowed down and large carriers has been optimizing their fleet and flight structure. Oil prices are expected to stabilize and so as RMB rate (as discussed in previous section), therefore we see that large carriers will continue to recover, and will outperform LCC in the next few years. See the last page for disclaimer Page 11 of 22

12 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Figure-28: Normalized Profit Growth Figure-29: Net Profit Margin CEA AC CSA Hainan Juneyao Spring CEA AC CSA 150% % % % 2H15 1H16 2H16 1H % -100% % Source: the Companies, Bloomberg, Guotai Junan International. Source: the Companies, Bloomberg, Guotai Junan International. Sector Valuation and Stock Pick Sector sentiment continues to improve along with better fundamentals. We expect sector sentiment will gradually improve in the next few years as supported by strong air travel demand, along with a more favourable operating environment from stabilized oil price and foreign exchange risk. All the above should translate to better operating metrics such as improving PLF, passenger yield; as well as better operating and net profit margins. H-listed aviation stocks have outperformed the market most of the year, currently outperformed HSI by 41.9 ppts. We attribute the strong performance mostly on earnings surprise, as valuation change is just similar to the market. Sector is currently trading at 1.2x PBR, up from 0.9x in Dec. 2016, where the increase in valuation is comparable to HSI PE (an increase of 21.2%), and approximates to five-year average. As we expect global air traffic to deliver growth, which will be strongly driven by the robust demand from China, and along with the improving efficiency as a whole and opening up of aviation market, the sector outlook is very positive. In the near future, SOE reforms and more radical changes in ticket pricing regulation will be strong catalyst to the industry. Therefore, we believe the sector valuation is undemanding and upgrade our sector rating to Outperform. Figure-30: 52-week Sector Relative Price Performance Figure-31: Sector 12M Forward PB (6 years) % of return Big 3 WA 52w return Hang Seng Index 52w return China aviation 12M forward PB Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International. Our current top pick is Air China (00753 HK, Accumulate ). We favour carrier with strong pricing power, namely Air China, as seen from its growth in passenger yield in 1H17. Air China has proven track record of strong profitability with less volatile earnings compared to other big three, indicating it is on pole position in the current environment. See the last page for disclaimer Page 12 of 22

13 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Figure-32: PE Band of Coverage Figure-33: PB Band of Coverage (X) 3 3 (X) CEA WA PE band PE (historical mean) PE (2017F) PE (historical high) PE (historical low) PE (2018F) Source: Bloomberg, Guotai Junan International. AC 0 CEA WA PB band PB (historical mean) PB (2017F) PB (historical high) PB (historical low) PE (2018F) Source: Bloomberg, Guotai Junan International. AC Table-4: Peers Comparison Market Cap PE PB ROE(%) D/Y(%) EV/EBITDA Company Stock Code Currency Last price (HKD) 16A 17F 18F 19F 16A 17F 18F 19F 17F 17F 17F China Southern Airlines Co-H HK HKD , China Eastern Airlines Co-H HK HKD , Air China Ltd-H HK HKD , Cathay Pacific Airways HK HKD , n.a (2.7) Simple Average Weighted Average China Southern Airlines Co-A CH CNY , Air China Ltd-A CH CNY , China Eastern Airlines Co-A CH CNY , Hainan Airlines Co-A CH CNY , n.a. Juneyao Airlines Co Ltd-A CH CNY , n.a. Spring Airlines Co Ltd-A CH CNY , Simple Average Weighted Average Ana Holdings Inc 9202 JP JPY 4, , Japan Airlines Co Ltd 9201 JP JPY 4, , Asiana Airlines KS KRW 4, , Korean Air Lines Co Ltd KS KRW 33, ,760 n.a Singapore Airlines Ltd SIA SP SGD , Virgin Australia Holdings Lt VAH AU AUD , n.a (4.6) Qantas Airways Ltd QAN AU AUD , Southwest Airlines Co LUV US USD , Delta Air Lines Inc DAL US USD , United Continental Holdings UAL US USD , Skywest Inc SKYW US USD , Alaska Air Group Inc ALK US USD , Deutsche Lufthansa-Reg LHA GR EUR , Air France-Klm AF FP EUR , Ryanair Holdings Plc RYA ID EUR , American Airlines Group Inc AAL US USD , Intl Consolidated Airline-Di IAG LN GBp , Easyjet Plc EZJ LN GBp 1, , Simple Average Weighted Average Global Simple Average Global Weighted Average Source: Bloomberg, Guotai Junan International. See the last page for disclaimer Page 13 of 22

14 Air China (00753 HK) Equity Research 股票研究 Company Report: Air China (00753 HK) Toliver Ma 马守彰 公司报告 : 中国国际航空 (00753 HK) toliver.ma@gtjas.com.hk Yield to Advance, Maintain Accumulate 收益领跑, 维持 收集 公 司 报 告 证 券 研 究 报 告 航空行业 Equity Research Report Company Report Strong yield management. We continue to favour AC due to its strong yield management and as the only carrier to achieve yoy increase in passenger yield in 1H17. This is mainly due to its relatively less aggressive expansion strategy in prior years and its strong network management, allowing it to have stronger pricing power. Besides, AC's profitability is among the best in the big 3, seeing AC as more superior in operating profit per ASK and net margins, and historical earnings are less volatile. We also believe AC is a major beneficiary for the continuous reform in ticket pricing. We have revised our forecast upwards as we believe market environment is improving, raising shareholders profit by 13.2%/7.5%/9.9% in 2017/2018/2019. The adjustment reflects our improved outlook in passenger yield as well as our reduced oil price assumption and a stable RMB trend. Maintain Accumulate rating. Revise up TP to HK$10.27, representing 13.4x 2017 PER, 13.1x 2018 PER, 1.5x 2017 PBR and 1.3x 2018 PBR. We believe that our valuation is not overly demanding despite valuation premium as supported by 1) stronger passenger yield and profitability, 2) improving sector sentiment with robust air travel growth expected. 强大的收益管理 我们继续看好国航, 因其强大的收益管理, 使其成为 2017 年上半年客 运收益唯一录得同比增长的航司 这是由于国航近年来相对不太激进的扩张战略和强大的 航线网络管理, 使其拥有更强的定价权 此外, 国航的盈利能力在三大航司中最佳, 在每 可用座公里营业利润和净利润率方面处于优势, 历史收益波动较小 我们相信国航在持续 的票价改革中是主要的受益者 我们上调了盈利预测, 因我们认为当前市场环境改善, 分别上调 2017/2018/2019 年股东 利润 13.2%/7.5%/9.9% 调整反映了我们对前线客运业务的改善预期 油价降低的假设 以及人民币企稳趋势 维持 收集 评级 目标价上调至 港元, 分别对应 13.4 倍 2017 年市盈率 13.1 倍 2018 年市盈率 1.5 倍 2017 年市净率和 1.3 倍 2018 年市净率 尽管估值升高, 但我 们认为我们的估值并不过高, 主要因为 :1) 更强的客运收益和盈利能力 ;2) 行业景气度 提升, 预计航空旅行增长强劲 Rating: Accumulate Maintained 评级 : 收集 ( 维持 ) 6-18m TP 目标价 : HK$10.27 Revised from 原目标价 : HK$7.62 Share price 股价 : Stock performance 股价表现 % of return HK$9.320 (10.0) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Change in Share Price 股价变动 HSI Air China Ltd-H 1 M 1 个月 3 M 3 个月 1 Y 1 年 Abs. % 绝对变动 % Rel. % to HS index 相对恒指变动 % Avg. share price(hk$) 平均股价 ( 港元 ) Source: Bloomberg, Guotai Junan International. 中国国际航空 Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率 12/31 (RMB m) (RMB m) (RMB) ( %) (x) (RMB) (x) (RMB) (%) (%) 2015A 110,057 7, A 115,145 6, (3.5) F 124,258 9, F 139,281 9, F 154,193 12, Shares in issue (m) 总股数 (m) 14,524.8 Major shareholder 大股东 CNAHC 41.57% Market cap. (HK$ m) 市值 (HK$ m) 135,371.1 Free float (%) 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 16,840.8 FY17 Net gearing (%) FY17 净负债 / 股东资金 (%) Weeks high/low (HK$) 52 周高 / 低 / FY17 Est. NAV (HK$) FY17 每股估值 ( 港元 ) 11.4 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 14 of 22

15 Air China 中国国际航空 (00753 HK) Air China (00753 HK) Financial Statements and Ratios Income Statement Balance Sheet Year end Dec (RMB mn) 2015A 2016A 2017F 2018F 2019F Year end Dec (RMB mn) 2015A 2016A 2017F 2018F 2019F Turnover 110, , , , ,193 PPE 155, , , , ,162 Passenger 95, , , , ,735 Lease prepayment 3,034 3,058 3,142 3,224 3,303 Cargo 8,447 8,305 9,475 10,431 11,371 Advance payment and deposit for aircraft 15,075 21,312 28,776 30,285 32,205 Other operating revenue 5,689 6,560 5,917 7,884 10,087 Investment in associates 12,591 15,309 15,145 15,488 16,566 Others 6,729 6,373 6,630 7,056 7,481 Operating cost (81,495) (84,138) (95,687) (107,310) (117,327) Non-current assets 193, , , , ,716 Jet fuel (24,043) (21,982) (28,018) (33,694) (37,617) Maintenance (4,015) (4,655) (5,467) (6,162) (6,915) Cash & cash equivalent 7,138 6,848 8,099 14,302 19,145 Routing (14,675) (16,045) (17,721) (18,929) (20,250) Pledged deposits Operating lease (5,146) (6,253) (7,678) (8,661) (9,544) Inventory 1,731 1,681 2,484 2,395 3,297 Staff cost (18,231) (20,076) (19,989) (21,018) (22,136) Trade receivable 3,252 3,287 3,763 4,282 4,785 Selling expense (4,559) (3,893) (4,201) (4,709) (5,214) Others 7,435 7,696 8,139 8,661 9,158 Admin. expense (1,415) (1,402) (1,988) (2,228) (2,467) Current assets 20,211 19,986 22,938 30,099 36,862 Others (9,412) (9,833) (10,624) (11,909) (13,184) EBITDA 28,562 31,006 28,571 31,971 36,867 Total assets 213, , , , ,578 Depreciation & amortization (13,011) (13,474) (14,178) (15,152) (16,257) Operating profit / (loss) 15,552 17,533 14,393 16,819 20,609 Bank loans 11,290 25,976 16,776 10,623 10,418 Finance lease 5,964 6,099 6,736 7,406 8,109 Non-operating revenue / (cost) (6,196) (7,320) (657) (2,404) (1,578) Trade payable 9,264 10,832 13,673 14,619 16,045 Net finance costs (2,661) (3,108) (2,966) (2,747) (2,656) Air traffic liabilities 5,759 6,314 6,738 7,241 7,785 FX gain / (loss) (5,156) (4,234) 2, Accruals and payable 11,290 13,095 14,131 15,840 17,536 Share profit of asso. 1, (163) 343 1,077 Others 6,979 1,864 1,902 2,020 2,385 PBT 9,355 10,213 13,736 14,415 19,031 Current liabilities 50,547 64,180 59,956 57,748 62,278 Tax (1,846) (2,454) (3,138) (3,406) (4,511) Net profit for the year 7,509 7,759 10,598 11,009 14,520 Long Term borrowing 48,988 37,833 37,854 40,674 39,889 Financial lease 37,803 36,295 40,085 44,069 48,255 Minority interest (446) (950) (1,297) (1,347) (1,777) Others 9,770 9,345 9,947 10,943 11,850 Profit attributable to shareholders 7,063 6,809 9,301 9,662 12,743 Non-current liabilities 96,561 83,474 87,886 95,685 99,994 EPS(RMB) Total liabilities 147, , , , ,272 Underlying EPS (RMB) DPS(RMB) Shareholders' equity 59,748 68,799 86,296 94, ,288 Non-controlling interest 6,775 7,597 8,894 10,241 12,018 Cash Flow Statement Total equity 66,523 76,396 95, , ,306 Year end Dec (RMB mn) 2015A 2016A 2017F 2018F 2019F BPS(RMB) PBT 9,355 10,213 13,736 14,415 19,031 Financial Ratios Depreciation and amortization 12,983 13,408 14,178 15,152 16,257 (%) 2015A 2016A 2017F 2018F 2019F Finance Cost 2,813 3,235 3,099 2,946 2,953 FX loss / (gain) 5,156 4,234 (2,472) 0 0 EBITDAR Net interest income / (cost) (152) (127) (133) (199) (298) Opt margin Change in working cap. (1,326) 3,943 3,021 2,728 2,261 Net Profit margin Share of profit / loss of asso. (1,620) (22) 163 (343) (1,077) Passenger revenue growth Tax payment (1,395) (2,103) (2,454) (3,138) (3,406) Cargo revenue growth (3.9) (1.7) Interest paid (3,181) (3,358) (3,505) (3,332) (3,340) Total revenue growth Others 5,939 (2,056) (1,383) (1,173) (891) EBITDA growth (7.9) Cash flow from operating 28,572 27,366 24,250 27,057 31,490 Operating profit growth (17.9) Net profit growth 85.0 (3.6) Capital expenditure (including finance (10,465) (8,977) (11,040) (8,547) (14,574) EPS growth 85.0 (3.6) lease) Advance payments and deposits 3,672 (10,799) (7,464) (1,508) (1,920) Underlying EPS growth (4.8) (30.7) Increase of lease prepayment (472) (92) (85) (82) (79) BPS growth Invest in associates ROA Others ROE Cash flow from investing (6,788) (19,013) (18,435) (9,943) (16,293) Net gearing Interest coverage Net change of bank loans (16,788) (725) (6,692) (1,484) (66) Current ratio Finance lease repayment (5,797) (6,469) (7,588) (7,857) (8,657) Quick ratio Dividend paid (795) (1,588) (1,564) (1,674) (1,739) Share issue , Operational Analysis Cash flow from financing (23,381) (8,781) (4,645) (11,015) (10,462) (%) 2015A 2016A 2017F 2018F 2019F Net change of cash (1,597) (428) 1,171 6,099 4,735 ASK growth Cash at beginning of period 8,640 7,138 6,848 8,099 14,302 RPK growth Effect of exchange rate changes Pax LF Cash at end of period 7,138 6,848 8,099 14,302 19,145 AFTK growth RFTK growth Cargo LF Source: the Company, Guotai Junan International. See the last page for disclaimer Page 15 of 22

16 China Eastern Airlines (00670 HK) Equity Research 股票研究 Company Report: China Eastern Airlines (00670 HK) Toliver Ma 马守彰 公司报告 : 东方航空 (00670 HK) toliver.ma@gtjas.com.hk 公司报告证券研究报告 Equity Research Report Company Report Fairly Priced, Downgrade to Neutral 定价公允, 下调至 中性 PLF and passenger yield fall behind. CEA continued to underperform among the big 3 carriers. Both PLF and yield disappointed, due to the still fast expansion on ASK, up 9.6% yoy YTD Nov. 2017, the fastest among the big 3 (see appendix 2 for full comparison). In addition, PLF was down 0.2 ppts yoy YTD Nov (other 2 carriers record PLF improvement) compared with growth in 1H17. As such, we think passenger yield will continue to record a decline in for full year We have revised our shareholders profit by 27.4%/25.4%/34.0% in 2017/2018/2019. The adjustment reflects slightly better passenger revenue, but is mainly driven by a more favourable RMB trend and oil price movement. The stock price has rallied approx. 43.5% since Oct along with other China aviation stocks and is currently trading at 1.0x PBR; we think that further valuation upgrades are limited as we think 1) aggressive capacity expansion and underperforming yield management cause CEA to continue to lag sector peers, and 2) the current valuation has already reached the 2-year average and current industry average. Therefore, we downgrade investment rating to Neutral but revise up TP to HK$ 5.85, representing 8.2x 2017 PER, 11.1x 2018 PER, 1.3x 2017 PBR and 1.1x 2018 PBR. 客座率和客运收益落后, 东航在三大航司中表现不佳 客座率和收益都表现低迷, 这是由 于可用座公里仍在快速扩大,2017 年前 11 个月同比增长 9.6%, 为三大航司中最快增速 ( 完 整比较见附录 2) 另外, 客座率并未赶上, 同比下滑 0.2 个百分点 ( 其余两大航司客座率 录得增长 ), 从上半年的增长转劣 因此, 我们认为全年的客运收益将继续录得下滑 Rating: Neutral Downgraded 评级 : 中性 ( 下调 ) 6-18m TP 目标价 : HK$5.85 Revised from 原目标价 : HK$4.78 Share price 股价 : Stock performance 股价表现 % of return HK$5.540 (10.0) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 HSI China East Air-H 航空行业 我们将 2017/2018/2019 年股东净利分别上调 27.4%/25.4%/34.0% 该调整反映了客运收入的略微改善, 但主要是受到人民币趋势和油价变动的正面影响 同其他内地航司股票一样, 东航股价自 2017 年 10 月以来上涨约 43.5%, 目前市净率为 1.0 倍 我们认为估值进一步提升的空间有限, 因为我们认为 :1) 激进的扩张和落后的收益管理导致东航继续落后于同业 ;2) 目前的估值已与 2 年平均及当前行业平均水平相当 因此, 我们将投资评级下调至 中性, 目标价上调至 5.85 港元, 分别对应 8.2 倍 2017 年市盈率和 11.1 倍 2018 年市盈率 1.3 倍 2017 年市净率和 1.1 倍 2018 年市净率 Change in Share Price 股价变动 1 M 1 个月 3 M 3 个月 1 Y 1 年 Abs. % 绝对变动 % Rel. % to HS index 相对恒指变动 % Avg. share price(hk$) 平均股价 ( 港元 ) Source: Bloomberg, Guotai Junan International. 东方航空 Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率 12/31 (RMB m) (RMB m) (RMB) ( %) (x) (RMB) (x) (RMB) (%) (%) 2015A 93,969 4, A 98,904 4, (7.9) F 110,829 8, F 117,142 6, (26.0) F 128,757 8, Shares in issue (m) 总股数 (m) 14,467.6 Major shareholder 大股东 CEA Holding 64.4% Market cap. (HK$ m) 市值 (HK$ m) 80,150.5 Free float (%) 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 20,080.4 FY17 Net gearing (%) FY17 净负债 / 股东资金 (%) Weeks high/low (HK$) 52 周高 / 低 / FY17 Est. NAV (HK$) FY17 每股估值 ( 港元 ) 6.7 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 16 of 22