China Southern Airlines, Eastern Airlines, and Air China each buy 80 billion yuan of aircraft; semiconductors are in winter?

Original link: https://www.latepost.com/news/dj_detail?id=1209

China Southern Airlines, Eastern Airlines, and Air China each buy 80 billion yuan of aircraft

On the first day of the second half of 2022, China Southern Airlines, Air China Group (Air China + Shenzhen Airlines), and China Eastern Airlines successively announced that they will purchase their latest short- and medium-haul main aircraft A320neo from Airbus. The three state-owned airlines have received orders for 292 aircraft with a total catalog price of over US$37 billion, of which:

• China Southern Airlines ordered 96 aircraft with a list price of US$12.248 billion (approximately RMB 81.894 billion at RMB 6.6863 per US dollar);
• In 2024-2027, 30/40/19/7 units will be delivered in sequence.

• China Eastern Airlines ordered 100 aircraft, with a list price of US$12.796 billion (converted at the mid-point price of 1 US dollar against 6.7035 yuan announced by the central bank on the day the agreement was signed, approximately 85.778 billion yuan);
• In 2024-2027, 28/31/34/7 units will be delivered in sequence.

• Air China ordered 96 aircrafts (64 from Air China and 32 from Shenzhen Airlines), with a list price of US$12.213 billion, which is about 81.66 billion yuan with reference to the exchange rate of China Southern Airlines.
• The planes ordered by Air China will be delivered in batches from 2023 to 2027.
• The aircraft ordered by Shenzhen Airlines will be delivered in batches from 2024 to 2027.

• The total list price is 37.257 billion US dollars, or about 249.332 billion yuan.

Their reasons for purchasing aircraft are similar. First, to expand capacity (expected to increase by 10%), second, to replace aircraft with expired leases or over-aged aircraft, and third, to buy aircraft at a discount. The actual price of aircraft purchased in the aviation industry is usually about 40% off the list price. Manufacturers will give different discounts based on the number of airlines introduced and long-term fleet planning, and the actual discount may be lower.

China Southern Airlines

This aircraft transaction is in line with the fleet development strategy formulated by the company’s “14th Five-Year Plan”. After comprehensive evaluation by the company, it is a favorable window period for aircraft introduction negotiations. The company uses the current opportunity to strive for better purchase conditions. The aircraft transaction is conducive to enhancing the Company’s market competitiveness; the terms of the aircraft transaction are fair and reasonable, and are in the overall interests of the Company and all shareholders.

Eastern Airlines

According to the “14th Five-Year Plan for Civil Aviation Development” issued by the Civil Aviation Administration of China, it is estimated that by 2025, the number of flights per capita in my country will increase from 0.47 in 2019 to 0.67, and the growth potential of China’s aviation market is still huge. Based on the confidence in the future development of the civil aviation industry, the company needs to plan and reserve the fleet capacity in advance. During the delivery period of the introduced aircraft, some of the company’s stock narrow-body aircraft will be withdrawn one after another due to the age of the aircraft and the expiration of the lease. , so the 100 aircraft purchased by the company this time will partly play a role in the replacement and renewal of the existing models. Under the circumstance that the aviation market has not yet fully recovered, the company’s introduction of aircraft is conducive to better business conditions. In this transaction, the company has obtained better conditions than before in terms of aircraft prices and other business terms.

Air China

This transaction is in line with the Company’s “14th Five-Year Plan” development plan and market demand, and is conducive to the Company and its controlled subsidiaries (hereinafter collectively referred to as the “Group”) to optimize the fleet structure and supplement long-term capacity. The transaction will expand the carrying capacity of the Group’s fleet, regardless of adjustments that may be made to the fleet based on market conditions and aircraft age. The transaction will increase the Group’s capacity by approximately 10.4%. The introduction of new aircraft will be concentrated after 2024. In order to partially meet the renewal needs of the fleet’s withdrawal of old aircraft, the actual net growth rate will remain within a controllable range. The Group expects that this transaction will make the Group’s operating costs more competitive in the market, and at the same time will be conducive to providing passengers with a high level of safety and comfort services.

In addition, China Eastern also mentioned that “after the introduction of this aircraft, it will be mainly used in the domestic trunk network market to encrypt high-yield routes and develop potential markets. Some subsequent aircraft will also be used to fly Japan, South Korea, Southeast Asia and other surrounding international routes. It will help the company to optimize the route network and improve the overall airline revenue level.”

Because of the instalment payments, none of the three airlines believe that the plane order “will have a significant impact on the company’s cash flow position and business operations.” However, as of the end of March 2022, the cash reserves of the three major airlines are:

• China Southern Airlines, 20 billion yuan
• China Eastern Airlines, 12.9 billion yuan
• Air China, 11.9 billion yuan

The three major airlines have accumulated losses of 99.2 billion yuan over the past two years. In 2020, 2021 and the first quarter of 2022, the three major airlines lost money respectively:

• China Southern Airlines, 10.842 billion yuan, 12.103 billion yuan, 4.496 billion yuan, a total of 27.441 billion yuan;
• China Eastern Airlines, 11.835 billion yuan, 12.214 billion yuan, 7.76 billion yuan, a total of 31.809 billion yuan;
• Air China, 14.409 billion yuan, 16.642 billion yuan, 8.899 billion yuan, a total of 39.95 billion yuan.

China Southern originally planned to introduce 103 Boeing 737 MAX and 25 Airbus A320neo planes between 2020 and 2024 — two direct competitors that are equal in performance and price, and two of the world’s top-grossing midsize jets ——The new order of 96 Airbus planes by China Southern Airlines this time is likely to mean that the order for the 737 Max has shrunk in a large area.

In May, Ma Xulun, chairman of China Southern, told an investor conference that the company’s plan to introduce a fleet of aircraft over the next three years would exclude Boeing’s updated version of the best-selling 737 Max model due to uncertainty over deliveries. China Southern did not provide an explanation for the specific reasons.

“Waidian Finance” exclusively learned that 10 737 Max ordered by China Southern Airlines have been assembled, and the source said that the delivery of this part of the aircraft should not be affected.

In the past, Chinese airlines preferred Boeing to Airbus, mainly focusing on the economy of Boeing, which is more fuel-efficient than Airbus, easier for pilot modification training, lower maintenance cost, and high residual value after retirement. Can be converted into a freighter, all of which are in the 737Max Suspended after global grounding.

Last year, Xiamen Airlines, which has an all-Boeing fleet, announced the introduction of 10 Airbus A320neos on lease, and may buy more Airbus planes in the future. China Southern holds a 55% stake in Xiamen Airlines.

Airbus has invested in China for many years and has a final assembly line in Tianjin, which produces and delivers passenger aircraft including Airbus A320 series and A330 series. In 2020, Airbus Tianjin delivered its 500th A320 series aircraft for final assembly.

According to Wind data, as of the end of 2019, the number of Airbus and Boeing airworthiness aircraft in China was 1,856 and 1,814, respectively. This is also the first time that Airbus has surpassed Boeing in China since statistics are available.

This year, the International Air Transport Association (IATA) expects global air travel to return to 2019 levels by 2024. In areas where travel restrictions have been lifted, there have been shortages of pilots or airport staff due to supply constraints for several years. In China, with the phased adjustment of epidemic prevention and control measures, the passenger traffic volume of civil aviation has also rebounded.

According to data from Feichangzhun, in the week of June 20, 2022, 112,631 passenger flights took off and landed at transport airports in mainland China, which is approximately equivalent to the weekly average in 2011, and continued to increase month-on-month. According to Wind data, the national civil aviation passenger traffic was about 11.97 million in May, equivalent to the level at the end of 2006 and the beginning of 2007. (Gong Fangyi and Shen Fangwei)

Semiconductor winter?

• Tianfeng Securities analyst Ming-Chi Kuo said yesterday (June 30) that as far as he knows, Chinese dealers, retailers, and scalpers have to pay the highest pre-order deposit ever for the iPhone 14, and in some areas the deposit is one higher than that of the iPhone 13. times; this means that iPhone 14 demand in China is likely to exceed expectations.

• Apple doesn’t seem so optimistic. According to media reports today, Apple, AMD, and Nvidia have all lowered their orders to TSMC. Among them, Apple lowered the first batch of iPhone 14 mass production target of 90 million units by 10%, AMD was due to the high inventory of PC chips, and Nvidia was the mining boom subsided.

• Weakening demand for traditional electronics is a big trend this year. According to Counterpoint, global monthly smartphone sales fell to 96 million units in May this year, the second time in 8 years that it fell below 100 million units. The last time was at the beginning of the epidemic. Gartner expects China’s smartphone shipments to decline by 18% this year and a 7% decline globally; PC shipments are expected to decline by 9.5% globally.

• Weakening demand is transmitted to upstream chipmakers. The data shows that due to the weakening of PC demand, the inventory turnover days of NVIDIA and Intel have increased significantly, basically returning to the level before the epidemic; Qualcomm, which dominates the Android mobile phone market, has also increased year-on-year.
• Data from Bloomberg Terminal showed that South Korean chip inventories continued to rise.
• One of the indicators most often used to measure the global semiconductor boom, the Philadelphia Semiconductor Index, has fallen to the position in November 2020 when the market first reported that the car was missing a core.
• Shares of Samsung and TSMC hit record lows for the year.

• Further upstream are the manufacturers. Micron Technology, one of the world’s largest memory chip makers, sharply lowered its revenue guidance for the next quarter at its earnings meeting yesterday, nearly a quarter lower than expected. Management said demand for electronics has weakened faster than expected, reducing manufacturing spending in the second half and maintaining prices by controlling shipments.

• It is said that TSMC is also preparing to hold a briefing meeting in mid-July to lower its full-year revenue target, but it is now trying to fill capacity. It has said that although demand for electronics has weakened, demand for automotive and HPC (high-performance computer clusters, such as cloud computing) is stable. The data also shows that automotive chip manufacturers such as Texas Instruments, NXP, and STMicroelectronics still have historically low inventory levels. (Lin Guangying)

Attached:

South Korea’s chip inventories rise

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Philadelphia Semiconductor Index falls to November 2020 position

Source: Wind, Late Finance. Click to see larger picture

When Xiaomi warmed up the new phone, he talked about some car-building details, involving battery and power management chips

• 3 days after warming up the new flagship phone 12S series with the cooperation with Leica. Xiaomi began to throw out new selling points today, focusing on batteries and battery-related chips, and said between the lines that these technologies are used in new energy vehicles.

• After Xiaomi announced the production of the car in March last year, it rarely said the details of the first car to be mass-produced in 2024. The Xiaomi car information mentioned by Xiaomi President Wang Xiang at the first quarter earnings conference this year is not the key point that Xiaomi mentioned when it released the mobile phone this time.

• One is to use the second-generation silicon-oxygen negative electrode battery in the mobile phone, and add nano-scale lithium-rich silicon-oxygen material to the negative electrode. Xiaomi said it is “the darling of new energy trams”, and its lithium-ion storage capacity is 10 times that of traditional lithium batteries.
• The storage capacity of lithium-ion batteries generally refers to how much electricity the battery can store after multiple charging and discharging, which affects the aging speed of the battery.
• Lithium batteries have a history of 30 years. Xiaomi did not mention how traditional lithium batteries are compared.

• Silicon oxide anode batteries are indeed a commonly used technology in new energy trams, but they are not uncommon in the mobile phone industry. Huawei used a high-silicon anode battery on the Mate Xs 2 collector’s edition of the folding screen mobile phone released in the first half of the year. It makes part of the battery more capable, but it also has negative effects, such as being prone to swelling.
• Weilan New Energy, which has been invested by Xiaomi and Huawei’s funds for many times, focuses on the research and development direction of reducing the negative impact of silicon-oxygen anode batteries.

• Another point of Xiaomi’s battery promotion is the launch of the power management chip G1, which claims to draw on the concept of “battery management system” in the new energy vehicle industry, and cooperate with silicon-oxygen anode batteries to improve the overall battery life by 3% to 5%. If the original battery life is 12 hours, it can be increased by 21.6 to 36 minutes. The technical threshold of battery management chips is not high, and it is also a hot spot in investment research in the new energy vehicle industry chain in recent years.

• As the period for users to change mobile phones is getting longer and longer, Xiaomi hopes to sell mobile phones more expensively and expand the proportion of high-end time, but it has not been effective before. According to market research agency Counterpoint, the Xiaomi Mi 12 series, which starts at 3,200 yuan, sold 60% less than the previous generation Mi 11 series in the first month, with less than 500,000 units. The Xiaomi Mi 12S has become the key to the success of Xiaomi mobile phones in the high-end market this year. It was released on July 4 and has 3 models. (He Qianming)

TikTok wants to follow Amazon to build overseas warehouses in the UK

• According to “LatePost” , TikTok e-commerce is preparing to launch the “Aquaman (Sea King)” warehousing plan in the United Kingdom, following the Amazon FBA model, allowing merchants to store goods in local warehouses in the United Kingdom in advance to save cross-border delivery time. It is said that “Sea King” means “the king who goes out to sea”.

• According to reports, about half of TikTok’s UK e-commerce GMV comes from cross-border, many of which are Chinese sellers. At present, the cross-border logistics services provided by the platform for domestic sellers are jointly completed by a number of companies; among them, the domestic collection is handled by Wanse Express, the cross-border transportation is carried by Yuntu Logistics, and the domestic and foreign warehousing is handled by the overseas warehouse of the barn. After the implementation of “Aquaman”, it can be shipped directly from the local warehouse, and the logistics time is expected to be shortened from 10-15 days to 3-5 days.

• There are always challenges. On the one hand, TikTok’s e-commerce business in the UK is relatively small, with an average daily sales of about US$300,000 in June. It is difficult to predict what will sell well, and it is difficult to stock up in advance. In addition, the best-selling products on the platform are still low-priced daily necessities such as “magic haberdashery”. There are many types and small quantities. Merchants prefer to sell as many as possible to reduce risks.

• In addition to the “Aquaman” plan, TikTok e-commerce also plans to simultaneously build transshipment warehouses in China. Merchants can also choose to store goods here in advance, at least saving the time from delivery to cross-border transshipment points. TikTok recommends selecting products with more than 200 sales in the past month and a unit price of more than $2.

Zuckerberg cuts hiring plan to make room for ‘worst recession I’ve seen in years’

• Meta (Facebook) CEO Mark Zuckerberg told employees on Thursday that he has slashed plans to hire engineers this year by at least 30% and warned everyone to prepare for a deep recession.
• “If I had to bet, I’d say this is probably one of the worst recessions we’ve seen in recent years,” Zuckerberg told employees during a weekly employee Q&A session.
• Meta has lowered its target of hiring engineers for 2022 to around 6,000 to 7,000 from an initial plan of around 10,000.

• In addition to cutting back on hiring, Zuckerberg is preparing to tighten performance management to screen out employees who fail to achieve more aggressive goals.
• “Some people shouldn’t be here.”
• “Some of you may think this place is not for you, if it is, please feel free, I have no opinion.”

• Zuckerberg worries that a recession and data privacy policy changes will hit his advertising business.
• In the first quarter of this year, Meta’s revenue growth rate fell to 6.6%, and its operating profit was -25% year-on-year. (Gong Fangyi)

Cryptocurrencies and the stock market plummeted, and second-hand prices of famous watches also shrunk

Stocks, housing and cryptocurrencies are booming in 2021, with analysts at Jefferies estimating that crypto wealth accounted for 25% to 30% of sales growth in the U.S. high-end market last year. The dramatic wealth effect has pushed up the prices of Rolex, Patek Philippe and other famous watches. New watches are hard to come by, and prices in the second-hand market are soaring.

Bloomberg columnist Andrea Felsted found that the luxury watch models that have grown the most in recent years are likely to be Patek Philippe’s Nautilus, Audemars Piguet’s Royal Oak and Rolex’s Daytona. They are currently down 18%, 13% and 6%, respectively, from their peak second-hand prices.

WatchCharts, which tracks quotations on the secondary market, said the rise in table prices had softened at the start of the year, “although prices continued to rise in January and February, we saw (sales) decrease.”

Rolex produces around 800,000 to 1 million new watches each year, which appears to be insufficient to meet current demand, leading to a strong secondary market. The pandemic has sparked a frenzy for second-hand luxury watches, which McKinsey estimates will surpass $29 billion in sales by 2025.

Compared with other asset classes, Rolex watches still outperformed major global stock indexes and cryptocurrencies this year, especially Bitcoin, which fell 58% this year. (Gong Fangyi)

Legend: Rolex Daytona second-hand price trend. Click for larger image

CHART OF THE DAY | “Wei Xiaoli” delivered over 10,000 in June

• In June, Ideal, NIO and Xpeng Motors delivered 13,024, 12,961 and 15,295 electric vehicles respectively. The three leading electric vehicle startups have delivered over 10,000 units in a single month for the first time this year.

• Nezha and Leapmotor’s June deliveries continued to grow month-on-month, but if the five electric vehicle companies were put together to count their monthly market share, their share would shrink significantly. (Gong Fangyi)

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OTHER NEWS

The Cyberspace Administration of China drafted personal information export contracts, which are not applicable to platforms with more than 1 million users.

Yesterday (June 30), the Cyberspace Administration of China publicly solicited opinions on the “Standard Contract Provisions for Personal Information Exit (Draft for Comment)”. The contract is signed by the personal information processor and the overseas recipient, and requires the personal information processor to focus on evaluating the legality, necessity, legitimacy, quantity, sensitivity, possible risks, etc. However, this contract is only applicable to those who meet the following conditions at the same time: operators of non-critical information infrastructure, processing personal information of less than 1 million people, and accumulatively providing overseas personal information of less than 100,000 people since January 1 of the previous year, Reach 10,000 people with sensitive personal information.

KFC’s first tea shop “Grandpa Zizai Tea” opened in Suzhou.

On June 30, KFC’s independent tea brand “Grandpa Zizai Tea” opened in Suzhou, mainly selling tea, snacks and ice cream, priced at 6-23 yuan. The store has a young “KFC” element, and some items also overlap with KFC and have the same price, such as the popped juice three-lime pomelo citrus tea, raw coconut Swiss roll, and other similar products are egg-flavored original thick egg tarts, small fresh meat shortcakes Wait.

Many places encourage the recruitment of graduates, and Beijing enterprises can receive a subsidy of 1,500 yuan for each new graduate they recruit.

According to CCTV news, the Beijing Municipal Bureau of Finance and the Beijing Municipal Bureau of Human Resources and Social Security jointly issued a notice on June 30 that employers who recruit graduates from Beijing colleges and universities within this year can apply for a one-time subsidy of 1,500 yuan per person, covering ordinary colleges and universities, technicians College etc. Shanghai also released its employment stabilization opinions today, mentioning that it encourages the society to recruit college graduates, state-owned enterprises increase their efforts to recruit graduates, and encourage graduates to start their own businesses and find flexible employment. According to the statistics of the Ministry of Education, the number of fresh graduates this year reached a new high of 10.76 million.

In June, Caixin China’s manufacturing PMI was 51.7%, production and logistics have improved significantly, and demand still needs to be repaired.

The Caixin China Manufacturing PMI was 51.7% in June, up 3.6 percentage points from May and the highest since June last year. Sub-item data shows that production has recovered faster than demand, and logistics and supply chains have improved significantly. However, employment is still under pressure, costs continue to rise, and ex-factory prices continue to be suppressed due to insufficient demand. The overall trend is in line with the official data released yesterday, although the rebound is more pronounced. The sample size of the Caixin survey is small, and the proportion of small enterprises is higher.

In China yesterday (June 30), 12 new cases were confirmed locally, and 151 cases were asymptomatic.

• Anhui: 9 confirmed cases, all in Si County, Suzhou City; 98 asymptomatic cases, of which 95 are in Si County and 3 are in Huaibei;
• Jiangsu: 1 confirmed case in Nanjing; 25 asymptomatic cases, including 1 in Nanjing and 24 in Wuxi; all are related to the epidemic in Si County;
• Tongxiang, Jiaxing, Zhejiang, Yiwu, Jinhua, and Bazhong, Sichuan: 1 new case was added asymptomatic, all imported from outside the province.
• Qingdao, Shandong: 2 confirmed cases and 11 asymptomatic cases were all staff members of the same company infected by imported cold chain goods.
• Tianjin and Wuhan: 2 new asymptomatic cases each, all closed-loop managers;
• Shenzhen, Guangdong: 1 case was confirmed; 2 cases were asymptomatic, both were close contacts for isolation observation;
• Dandong, Liaoning: 7 cases were asymptomatic.

BA.4 and BA.5 became the main epidemic strains in the world.

According to the World Health Organization, from June 20 to 26, there were 4.1 million new cases of new crowns worldwide, and the number of new cases increased for three consecutive weeks. The growth rate was the highest since April. .4 and BA.5 are promoted. The latest data shows that BA.4 and BA.5 accounted for 55% of the new cases, becoming the main epidemic strains in the world for the first time. Among the new cases in the United States last week, the combined proportion of BA.4 and BA.5 also reached 52.3%, BA.1.21.1 dropped to 42%, and BA.2 dropped to 5.7%.

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Some international schools have turned to Japan to build schools and recruit Chinese students.

According to the official account “Dingsi”, Shenzhen Charterhouse College, which provides a four-year British-style course, ended its operation on June 30. On the one hand, the enrollment was not satisfactory. In addition, due to the influence of the policy, it was unable to obtain a K12 school license to launch new business. The academy was established under the authorization of Charterhouse, one of the “nine public schools” in the UK; since last year, many authorized international schools in China have closed down or adjusted their directions, such as recruiting only foreign students. According to media reports, many international schools plan to set up new campuses in Japan, focusing on recruiting Chinese students.

World’s largest chocolate factory shuts down due to salmonella.

Swiss chocolate manufacturer Barry Callebaut said on June 30 that Salmonella was found in a production batch at its Wieze factory in Belgium on Monday, and it has now been confirmed that the source of the contamination is raw material lecithin; all production lines have been stopped and blocked. And recover the possible affected products produced in the past week. The factory is the largest chocolate factory in the world, and customers include Nestle, Hershey, Mondelez, Unilever, etc.

After being closed for nearly half a year due to the epidemic, the world’s No. 1 restaurant can’t handle it anymore.

Noma, located in Copenhagen, Denmark, is a three-Michelin-starred restaurant and ranked first among the world’s 50 top restaurants in 2021, with per capita spending ranging from $420 to $700. In December 2020, Noma was closed due to the epidemic and reopened in June last year. According to the document, it received a government subsidy of $1.5 million in 2021, but it still lost $240,000. But the restaurant says things are improving, with the latest bookings lined up for late October.

Tesla’s Texas factory has applied for an expansion of 46,000 square meters, which is about 5% of the existing area.

According to media reports, Tesla submitted a document on June 29 to apply for the expansion of the Texas factory. The expansion covers an area of ​​about 46,000 square meters. With the design of several floors, it is expected to add at least nearly 100,000 square meters of work space, or use to produce new models such as the electric pickup Cybertruck. The Texas Gigafactory, which only opened in April this year and covers an area of ​​about 930,000 square meters, was last week when Musk complained that it was a “money melting pot” , but this week it was reported that production capacity had climbed to thousands of vehicles per week.

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The title image is from Rikoooo, an Airbus A320neo rendered by Microsoft Flight Simulator 2020

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