国泰航空(00293.HK):Recovery On Track; Raise PT to HK$15.34

2018-03-16 17:41 港股研报君 阅读 1723

机构:摩根士丹利

Positive 2H17 results: Cathay's 2H17 results returned to profit of HK$792mn, after a significant net loss of HK$2bn in 1H17. This was mainly driven by a 19% surge in cargo revenues, which saw an 11.3% YoY recovery in yield, and robust cargo volumes (RFTK: +9% YoY). In addition, thanks to management's execution of its business transformation programme, unit costs (ex-fuel costs) remained flat.

Raising 2018-19e earnings: Given better-than-expected earnings performance in 2H17, we raise our 2018-19 net profit forecasts by 10% and 2% to HK$1.28bn and HK$4.08bn, and introduce a 2019e net profit of HK$4bn, supported by: 1) further recovery in passenger and cargo yields, 2) less fuel hedging losses amid increasing crude oil prices and 3) more contributions from Air China (18.13% owned by Cathay Pacific).

Remain EW: We raise our price target to HK$15.34 from HK$13.95, to reflect our increased earnings forecasts, but we remain EW given limited 10% upside potential from the current share price. Cathay's stock price has rallied 14% YTD (vs. +5% for the Hang Seng Index). We believe the market has factored in the business turnaround potential, while uncertainties remain on the outlook for export demand growth. More importantly, we are still concerned about: 1) Cathay's strategic position as a Hong Kong-based transit-driven carrier facing intense competition from other countries/regions, and 2) potential traffic diversions after the launch of Guangzhou-Shenzhen-Hong Kong Express Rail Link in 3Q18.

Potential risks: Upside: 1) Stronger-than-expected profit turnaround; 2) Recovery in premium travel and potential stabilization or recovery in cargo demand; Downside: 1) Sustained yield pressure led by market competitions; 2) Exogenous events.

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