Daily Investment Strategy

Daily focus：China Southern Airlines（1055）

At the annual meeting on January 9, the Civil Aviation Administration of China (CAAC) announced that China's aviation industry achieved profitability in 2024, recovering from losses experienced between 2020 and 2023, thanks to record passenger numbers and steadily increasing cargo volume. Looking ahead to 2025, the industry is expected to continue its upward trajectory, with profits projected to rise further. In 2024, a China recorded a total of 610 million entries and exits, a year-on-year increase of 43.9%. Currently, China has implemented unilateral visa-free policies with 38 countries and comprehensive mutual visa exemptions with 26 countries. On January 13, 2025, the Chinese State Council issued a document outlining measures to expand service consumption and promote the development of cultural and tourism industries. These measures aim to optimize tourism entry policies, expand the scope of countries enjoying visa-free treatment, and further encourage international travel. In terms of available seat kilometers (ASK), China Southern Airlines' international routes are expected to grow by 17% in 2025, higher than the growth of its peers, reflecting China Southern Airlines' greater ability to meet the growing demand for inbound tourism. In December 2024, China Southern Airlines' passenger capacity (in terms of revenue passenger kilometers) increased by 10.07% yoy, with domestic, regional, and international routes increasing by 3.44%, 7.45%, and 32.50% yoy, respectively. The passenger load factor was 84.55%, a yoy increase of 5.17 ppts. Whether it is passenger load factor or cargo load factor, China Southern Airlines has performed better. It is worth mentioning that for the passenger load factor of international routes, it can be found that China Southern Airlines has surpassed the level of 2019. Overall, the operating data of China Southern Airlines shows the company to be a good pick for the sector. Target price is HK$4.1.

S&P 500 edged higher, ending higher for third straight session

The S&P 500 climbed for a third straight session on Thursday as investors weighed the latest batch of corporate earnings. Meanwhile, investors appear to have shaken off worries about tariffs, with sentiment improving after President Trump earlier suspended tariffs on Mexican and Canadian goods. Initial jobless claims came in at 219,000 in the week ended on Feb. 1, while economists had expected a reading of 214,000. The prior week's figure was slightly revised higher by 1,000 to 208,000. The data comes ahead of the release of the all-important nonfarm payrolls report for January on Friday, which should provide a glimpse into labor demand that is closely monitored by Federal Reserve policymakers. Economists are predicting that the US economy added 169,000 jobs last month, down from 256,000 in December.

Hong Kong Stock Connect had a net inflow of HK$9.0bn on Thursday of which Tracker Fund (2800) had the largest net inflow, reaching HK$4.55bn; followed by HSCEI ETF (2828). Tencent (700) recorded the largest net outflow at $0.82bn, followed by China Mobile (941).