HK_China Transportation & Infrastructure_ Week in Review (Issue 41-24)

Summary of Key Points from the Conference Call Industry Overview - Industry Focus: Hong Kong/China Transportation & Infrastructure [2][30] - Current Market Sentiment: In-line industry view with potential negative returns driven by spot market weakness [2][30] Company-Specific Insights CSH and OOIL - CSH's 3Q24 Performance: Recurring net profit reached Rmb21.2 billion, representing a 288.57% year-over-year increase, aligning with expectations [2] - Minority Interest: Implied minority interest for 3Q24 was Rmb2.8 billion, up 250% YoY, attributed to improved earnings from OOIL [2] - Dividend Yield: Estimated 2H24 dividend yield is 8% [2] - Earnings Peak: 3Q24 is expected to mark peak quarterly earnings for 2024 [2] J&T Express - Volume Growth: 3Q24 volume growth slowed compared to 2Q24, but J&T is on track to meet full-year volume guidance [3] - Market Share: Slowed market share gain in China due to a focus on profitability and minor impacts from price hikes in September 2024 [3] National Holiday Performance - Parcel Volume: During the 2024 National Holiday, express companies picked up 3.16 billion parcels and delivered 3.12 billion parcels [30] - Passenger Traffic: Average daily passenger traffic was 286 million, a 4% YoY increase [30] Technology and Future Outlook - Tech Diffusion in Logistics: The application of technology, particularly AI, is expected to reshape the future of China's logistics industry [4] Market Data Observations - Air Capacity: International air capacity reached 75% of 2019 levels, down from 77% the previous week [6][31] - Express Delivery Volume: Average daily express delivery pickup volume was 447 million, down 13.7% week-over-week but up 13.4% YoY [6][10] - Shipping Rates: SCFI and CCFI decreased by 9.8% and 6.0% WoW, respectively [15][33] Economic Indicators - RMB Depreciation: RMB depreciated by 0.91% WoW to Rmb7.0827 per USD [8][31] - Jet Fuel Prices: Jet fuel prices increased by 4.3% WoW to US$89.39 per barrel [8] Stock Performance - Aviation Services: Outperformed the market with a -0.6% WoW change compared to -3.7% for the market [7][30] - Dry Bulk Shipping: Underperformed with a -9.6% WoW change [7][30] Potential Catalysts - Upcoming Events: Container shipping alliance's general rate increase planned for October 15, 2024, and 3Q24 results from various companies expected by the end of October [5] Conclusion - The transportation and infrastructure sector in Hong Kong/China is experiencing significant growth, particularly in express delivery and logistics, driven by technological advancements and recovering passenger traffic. However, challenges such as market volatility and currency fluctuations remain pertinent.