Our stock returns beat the Street by 10% in the past year

6 June 2018, Asia Pacific – Time flies, Crucial Perspective is now 15 months old! We take this opportunity to review the performance of our stock ratings so far. 

According to Bloomberg’s tally, our absolute return based on our stock ratings was 17.4%, outperforming all the analysts on the Street’s stock returns by 10% in the past 1 year

Bloomberg tallies each analyst’s stock returns and ranking versus the returns of all the analysts (i.e. peers) covering the same stocks based on their recommendations. We have grabbed a screenshot here for your reference.  For Bloomberg Terminal users: Please type <Corrine Png> and select <Analyst Recommendations> on your Bloomberg terminal to see our stock ratings’ absolute returns performance in real time.

Chart: Crucial Perspective’s stock returns and ranking versus the peer returns of all the analysts covering the same stocks based on their recommendations (Past 1 year as at 6th June 2018)

Crucial Perspective’s stock returns and ranking versus the peer returns of all the analysts covering the same stocks based on their recommendations (Past 1 year as at 6th June 2018)

Our stock recommendations yielded an average return of 17.41% while the analyst community (i.e. peers)’s average return was 7.34% in the past 1 year. Our returns have therefore outperformed our peers’ returns significantly by 10% during this period. (See the Average Return numbers in green in the top right-hand corner of the chart above.)

Note: The above calculations by Bloomberg include the 12 stocks that have been under our coverage for at least 12 months.

 

22% absolute return since we initiated research coverage – OOIL (+71%), Air China (+51%) & China Eastern Airlines (+46%) are our best stock calls to date

Since our launch in March 2017, we have initiated research coverage on 17 companies so far.

In summary, our 17 stock ratings have yielded an absolute return of 22(on a market cap-weighted basis) so far, significantly outperforming the Street. 12 out of our 17 stock ratings (i.e. 70% of our coverage universe) have yielded positive returns so far.

Our Outperform rating of Orient Overseas International (OOIL) has been our best stock call so far – OOIL’s share price has risen 71% since we initiated research coverage on 14th March 2017.

This is followed by our Outperform rating of Air China, whose share price has risen 51% so far since we initiated coverage, followed by China Eastern Airlines (+46%) and China Southern Airlines (+45%).

In addition, we highlighted Air China as our top pick among the Chinese carriers when we initiated research coverage on 4th April 2017 and it has indeed outperformed China Southern Airlinesand China Eastern Airlines.

Chart: Absolute returns performance of Crucial Perspective’s ratings since our research coverage initiations (as at 6th June 2018)

Absolute returns performance of Crucial Perspective’s ratings since our research coverage initiations (as at 6th June 2018)

Our Best Stock Calls So Far

Here are our best stock calls in the Asia Transportation sector so far:

#1 Initiated coverage on Orient Overseas International Limited with Outperform rating (71% return)

OOIL (316:HK)’s share price has risen 71% since we initiated research coverage on 14th March 2017 and is our best call.

Orient Overseas (International) Ltd. Initiation Report – Still good value based on key fundamentals and potential takeover

 

#2 Initiated coverage on Air China, China Eastern Airlines and China Southern Airlines with Outperform ratings with Air China as our top pick (51%, 46% and 45% returns) 

Air China (753:HK)’s share price has risen 51% so far since we initiated coverage. We mentioned that Air China is our top pick among the Chinese carriers when we initiated research coverage on 4th April 2017 and it has indeed outperformed China Eastern Airlines and China Southern Airlines whose share prices have risen 46% and 45%respectively since we initiated coverage on these stocks on 10th April 2017.

Air China Initiation Research Report 2017: Top choice among the Chinese airlines

China Eastern Airlines Initiation Research Report 2017: Rapid improvement but aggressive expansion risk abounds

China Southern Airlines Initiation Research Report 2017 – Strong domestic drivers tempered by funding needs

 

#3 Downgraded China Airlines (2610:TT) from In-Line to Underperform rating (17% return)

China Airlines (2610:TT)’ share price has fallen 17% after we downgradedour ratingto Underperform from In-Line rating on 31stJanuary 2018 given our concerns that the worsening tensions between China and Taiwan will negatively impact cross-straits travel demand and rising fuel prices will dampen China Airlines’ already thin profit margins. We kept our In-Line rating with NT$15.0 fair value for EVA Airways and the stock price has indeed remained at NT$15.0 on average in the past 5 months.

Winners & Losers from worsening China-Taiwan tensions

 

#4 Initiated coverage on Japanese carriers with Outperform ratings (16% and 14% returns)
Japan Airlines (9201:JP) and ANA Holdings (9202:JP)’s share prices have risen 16% and 14% respectively since we initiated coverage on 3rd August 2017, stating that JAL has more upside than ANA.

Research Report: Japan Airlines (9201:JP) offers more upside than ANA (9202:JP)

 

#5 Initiated coverage on Singapore Airlines with Outperform rating (16% return)
Singapore Airlines (SIA:SP)’s share price has risen 16% since we initiated coverage on 11thMarch 2017.

Singapore Airlines Initiation Research Report 2017: Will SIA be a “sexy” stock again?

 

Note: Stocks with upside of more than 10% based on our fair value are assigned an Outperform rating. Stocks with downside of more than 10% based on our fair value are assigned an Underperform rating. Stocks with upside or downside of less than 10% based on our fair value are assigned an In-line rating. These are Crucial Perspective’s proprietary rating classifications and by no means serve as investment recommendations.

 

Independent Research Declaration: Crucial Perspective does not own any position in the equities featured in this report nor have we received any compensation for writing this report. 

Related Reports:

Here are the links to all our company initiation research reports for your reference:

Air China Initiation Research Report 2017: Top choice among the Chinese airlines

AirAsia (AIRA:MK) Initiation Research Report 2017 – Cost Leadership, Extensive Network & Strong Branding

Cathay Pacific Airways (293:HK) Initiation Research Report 2017 – Cathay Pacific outlook to stay gloomy?

Cathay Pacific (293:HK) upgraded to Outperform: Takeover by Air China (753:HK) likely

China Eastern Airlines Initiation Research Report 2017: Rapid improvement but aggressive expansion risk abounds

China Southern Airlines Initiation Research Report 2017 – Strong domestic drivers tempered by funding needs

Research Report: Chinese Airports (694:HK, 600009:CH) may see near-term price correction

Research Report: EVA Airways (2618:TT) & China Airlines (2610:TT) valuations to remain rangebound until China-Taiwan relations thaw 

Winners & Losers from worsening China-Taiwan tensions

Research Report: Japan Airlines (9201:JP) offers more upside than ANA (9202:JP)

Orient Overseas (International) Ltd. Initiation Report – Still good value based on key fundamentals and potential takeover

Research Report: Pacific Basin Shipping (2343:HK) highly leveraged to Handysize recovery

Singapore Airlines Initiation Research Report 2017: Will SIA be a “sexy” stock again?

SIA Engineering (SIE:SP) Initiation Research Report 2017: Well-positioned to leverage on potential MRO upturn

Singapore Technologies Engineering (STE:SP) Initiation Research Report 2017 – Strong orderbook as MRO, Infrastructure & Defense spending increases

 

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