Changjiang Securities: Aviation, direct logistics, and bulk supply chains are stimulated by fiscal policies and are more flexible, and a 3+3 combination arrangement is recommended

The Zhitong Finance App learned that Changjiang Securities published a research report saying that looking ahead to the fourth quarter, because of the Fed's interest rate cut and domestic policy shift confirmation, the bottom of the market has passed, the bottom of the policy is gradually being established, and the bottom of the economy (or basic bottom) will not be too far away. Judging from the driving factors, the current policy injects more liquidity into the stock market, while the market is paying close attention to the strength of fiscal policy. Sectors that are more flexible and stimulated by fiscal policy include aviation, direct logistics, bulk supply chains, and domestic trade consolidation. In terms of the direction of configuration, according to the profit-price-earnings ratio scale for each transportation segment drawn up by the team, currently the most cost-effective industries with large market capitalization weights are: aviation, oil transportation, and direct logistics. Based on comprehensive considerations, the team recommended a 3+3 combination, that is, the large industry chose 3 aviation, oil transportation, and direct logistics, and the small industry chose 3 cross-border logistics, bulk supply chain, and domestic trade consolidation.

Aviation: revenue and cost resonate, recreating the charm of the cycle

If we try to find the most “cyclical” target from the shipping sector and the entire market, there is no doubt that aviation stocks have been selected: since 2007, the cumulative absolute earnings of aviation stocks through three rounds of bull markets have ranked first in the entire market. Looking ahead to the future market, supply rigidity is tightening, and demand recovery signals are clear; revenue and costs resonate, and cyclical flexibility is finally released: benefiting from the strength of economic stimulus policies, demand is expected to gradually recover, considering continued shortages in aircraft introduction, the tightening of supply rigidity in the medium term, compounded by improvements in oil sinks, upward momentum in industry savings, and an opportunity to reverse the cycle. Taking into account performance flexibility and valuation scores, we first recommend A-share private airlines (Jixiang, Chunqiu, and Huaxia) and the three major Hong Kong stock airlines; if the PMI index is significantly reversed, the three A-share airlines with flexible targets are recommended.

Logistics: seeking a flexible direction from within, embracing “Asia, Africa and Latin America”

At a time when domestic macroeconomic policies were shifting, market confidence was the first to recover, and trading recovery expectations became the mainstream direction. At the level of external demand, the US political election in the fourth quarter increased external uncertainty, and the decline in European and American PMIs dragged down the global economy. On the other hand, the “Asia, Africa, and Latin America” export chain, which is desensitized from the European and American economies, remained high. Therefore, we are exploring the investment direction of the logistics industry in the fourth quarter from a quantitative and logical perspective: 1) The bottom procyclical logistics targets. The price-earnings ratio of SF Express and Debon is at a historically low level, which is a flexible variety of improvements in domestic demand expectations. Major supply chain leaders are in a broken state. Once fiscal policies are effective, valuations still have a lot of room for repair; 2) Along with the recovery in market risk appetite, Jiayou International, the “Asia, Africa, and Latin America” cross-border logistics leader with strong fundamentals, is extremely cost-effective.

Shipping: Configuration Choices Under Weak Reality and Strong Expectations

First, starting from valuation and profit quantiles, we recommend oil transportation where supply is limited and domestic and foreign demand improves marginally by three factors: domestic policies strengthen or drive a further recovery in demand; Saudi Arabia may increase production during the year, catalyzing expectations for an increase in OPEC+ crude oil production; the Federal Reserve cut interest rates. The current recent monthly price spread of oil has narrowed further, and demand for stock replenishment is imminent. Cyclical momentum is increasing, and the core recommendation is the world's leading oil transportation companies COSCO Marine and China Merchants Shipping. Second, based on logical deduction, choosing domestic policies to strengthen expectations, benefit domestic demand and improve domestic trade to the greatest extent. The main types of goods in domestic trade transportation are mainly commodities, and the impact of policies on commodities is most significant. Therefore, the bottom of demand is showing, and Nakatani Logistics, a leading company with both operational resilience and upward flexibility, is recommended.

Infrastructure: Airports are building the dream of high-end consumption again, and highway valuations are boosted

1) Airports are long-term assets, and profits and valuations are more correlated with expectations of long-term economic recovery. In retrading history, airport stocks are a typical pro-cyclical type. They are highly related to expectations of a recovery in domestic demand. Ultimately, they make money from high-end consumption and economic recovery. 2) A breakthrough in the existing toll period policy for expressways may be imperative, and the pain points that make it difficult for the industry to operate sustainably have gradually been alleviated, and it is expected that valuation repair will be ushered in. In the long run, buy steady growth+stable dividends; in the short term, the valuation of Hong Kong stocks is clearly discounted, and the dividend ratio is cost-effective.

Risk Alerts

1. Macroeconomic fluctuations; 2. Oil prices and labor costs have risen sharply; 3. European sanctions on Russian oil have been lifted; 4. The competition in express delivery prices has exceeded expectations.