China Southern Airlines Limited (ADR) (ZNH)

litost (99.94) Submitted: 3/30/08 8:41 AM : Start Price: $70.36 ZNH Score: -54.24

Well, my speculation on last year turned to be a failure.
But now, the price is attractive again. There are 3 reasons to buy chinese airlines now:
1.Chinese Yuan rallied against dollar crazily since Nov 2007, and now the rally is even accelerating. The airline companies in China like "znh" and "cea", their debt is counted in U.S dollars(to by Boeing aircraft, etc), but they generate revenue and profit in Chinese Yuan.
2.Chines Olympic Games will bring heavy domestic and international traffic in airlines which exceeds their capabilities, so the pricing power is on their side. There will be a decent revenue and profit in 2008.
3.Believe or not, my personal opinion is oil price will plunge soon, due to the basic demand-supply law, which is a good news to airlines, especially chinese airlines who don't use any derivatives to hedge...... so tragedy turns to be a comedy, ironically.
The other reason for znh itself is a)it finished the acquisition of 2 smaller airlines for a while, and brought the operating cost down. b)capability up 43% due to the new aircraft it bought during 2007.
We have a good chance to buy cheap chips due to the huge plunge on stock market in Shanghai and Hongkong last quarter.

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