When will the epidemic end? According to the current situation, the situation in Europe and the United States seems to be improving. Similar to the situation in mainland China in February, it took about 40 days from the trend of decreasing the number of diagnoses to the basic control of the situation. If it is more conservative, it is expected that the economy of the United States, Europe and East Asia will return to normal before the end of June this year. In the fourth quarter, the vaccine will undermine most problems.
In this way, the time for us to return to normal life will not be too far. Compared with SARS in 2003, the mortality rate of the new crown is much lower, but it is the kind of virus that we say has a greater impact on humans. People’s behavior changes because of it, which is probably also worth noting for stock investors.
In fact, the biggest social behavior change brought about by the new crown is the shift in preference for aggregation. It is said that the small cycle of the metabolic cycle of the human brain is 3 months. If someone wants to quit smoking, he will be banned from smoking for 3 consecutive months, after which the attractiveness of cigarettes will drop to zero. The gathering behavior of human beings is the same. If someone does not go out for 3 months, he will feel that it is good to stay at home without any external stimulation.
In so many industries that need aggregate support, I suspect the cruise industry is the hardest hit. In addition to a few cruise line companies that may encounter class action lawsuits from New Crown Infectors, what’s more terrible is that people’s phased aversion to aggregation may make the industry disappear (temporarily disappear).
A problem in this industry is that if cruise companies want to make their projects more attractive, they have to make cruise ships bigger and bigger. On this basis, if a cruise company wants to make a profit, it needs to install enough people on a huge cruise ship. For example, Carnival Corporation and Royal Caribbean Company, in general, their average load factor is more than 100%.
This is the same idea as the black car drivers who go to Yanjiao from China World Trade Center to Yanjiao every six or seven o’clock every day.
In addition to tourists, the service levels of cruise companies also have a considerable relationship with the intensity of their staff. Generally speaking, the ratio of the crew of a cruise ship to fully loaded tourists is about 1: 2.5 to 3.5. At present, the world’s largest cruise ship Ocean Harmony is almost full of nearly 10,000 people. The profitability of the cruise industry is too dependent on human aggregation.
Crowded large cruise ships are simply a testing ground for the speed of virus transmission. It is likely that the industry’s income will not be very good for a long time after the epidemic ends. But at the same time, the cost of maintaining and operating cruise ships is high.
For example, the Ocean Harmony we just mentioned is about twice as large as the Ford, the largest aircraft carrier in the United States. The cruise companies spend billions of dollars on berths, impairments and maintenance costs for these big guys every year. This is a rigid cost, and even if cruise companies are simply not able to gather people, these costs will not be reduced. They chased the shipowners like shadows.
In addition, the liabilities of large cruise companies are not low, mostly due to the debt owed when the construction of giant ships. If the road closure measures to control the epidemic continue for three months, and people will regain their confidence to gather for another three months, the survival of those cruise companies will face problems, and the bigger the company, the bigger the problem. Because cruise companies want to get rid of those big ships, they can only sell them at scrap prices.
Now the prices of the three largest cruise companies in the secondary market have fallen quite low, but I advise you not to take this risk. Now it is difficult to figure out whether the assets of such companies are positive or negative.
Even if the epidemic is over, people’s fear and aversion to aggregation are not over.
Airlines look a bit like cruise companies for the time being, but in the long run they are much better than cruise companies. Taking a plane is just what people need, and traveling on a cruise is the entertainment of old middle-class ladies. If a cruise is going to be a terrible infectious disease, they can put more energy on the square dance.
It is believed that shortly after the epidemic ends, airline performance will return to the previous level. Of course, the problem now is that those airlines need to be able to survive beyond the epidemic.
The four largest US airlines are now in a difficult situation. They are United, American Airlines, Southwest Airlines and Delta Air Lines. These companies have reached an agreement that if the US government does not implement ambulance, they will not be able to maintain it. And they directly and indirectly link 700,000 to 900,000 jobs.
After repeated bargaining, the US government promised to provide these companies with 25 billion US dollars of assistance-through the financial purchase of these companies to achieve. The US government does not want to intervene in the operations of these companies. After they get through the difficulties, the shares will be sold back to the company or other interested investors.
By the way-next time about Buffett selling airline stocks. Buffett’s shareholdings of all airlines’ shares have been reduced to below 10%, just to ensure that the airlines he holds will not encounter procedural obstacles in the rescue plan. It’s not at all what the ignorant people said that Buffett got a copy and got it on his waist. Those fools’ interpretation of Buffett’s logic is really incredible.
Judging from the market valuation of airlines, they are really amazingly cheap, and the Delta Air Lines P / E ratio of the asset quality is only 3 times (I do n’t know what it was like when you saw the magazine). Although the airline ’s performance this year may be very bad, it is too much for the industry ’s relative leader. If cheap airlines and cruise companies are in front of you, you should definitely choose the one in front.
As for the Chinese airlines, I believe that their performance this year will have no small problems. However, it seems that the investors of the airlines are very optimistic about this. The market value of China Airlines with the best asset level is similar to that of Delta, while the profit is only 1/5 of Delta. This water level difference in the investment market is sometimes difficult to understand.
Relative to American Airlines, China’s peers do not seem to be on the move but on vacation.
Cinema and movies
By the time you see the magazine, I believe the cinema line is not yet open. In order to save costs, perhaps these companies can temporarily discount their employees’ wages, or simply let go of those young people. Anyway, this industry does not require long and complicated training, and it can also be hired after the epidemic. .
However, this bulky industry is not very optimistic and is not entirely caused by the epidemic. At the end of last year, the income growth of the nationwide cinema line felt like a bottleneck. And this time the road closures gave them a heavy blow.
I remember a few years ago, we talked about a topic, which indicator is most relevant in the Chinese film industry and the big economy, I say it is real estate. Now it seems to be true.
Because those theaters are basically built in large and medium-sized shopping malls, the construction of these shopping malls is an indication of the stage of the urbanization process in China. The biggest distribution channels for movie box offices are these cinema lines. If the real estate industry appears to be stagnant, it will also affect the investment level of the movie industry.
I guess this year will be like this: the box office of the Chinese film that has been cut off the Spring Festival stalls will become very bad this year, and it is conservatively estimated that there will be a 50% drop. And this has not taken into account the reduction in the number of people watching the movie because of the fear and aversion to gathering after the epidemic.
Perhaps at this time people will think of the addition of video website channels to the movie box office. But online, the challenges faced by movies are complex, and overall, they do not have an advantage due to higher costs. To a certain extent, the competition between online movies and things like eating fairy balls and broadcasting beauty feet washing is actually very large.
In addition to watching movies, companies whose businesses involve concentrated viewing of performances and sports competitions have also been affected. Since many companies in these fields are relatively small, many of them need to be reborn after this disaster.
After the epidemic, how long people’s aversion to aggregation will last. Whether their impact on companies that rely on aggregation is structural or temporary, should be classified in more detail.
In some cases, it seems that functional activities are not affected when some gathering activities are held online; however, in some cases, you will realize that watching pornographic videos is very different from having sex with someone you love.
These two evolutions are also where people are complicated and interesting.