UBS Group published a Research Report stating that although Cathay Pacific (00293.HK) has seen its stock price increase by nearly 30% since announcing the buyback of convertible Bonds, the firm remains optimistic about Cathay, believing that the company is in a favorable position and will achieve an operating margin above trend in the coming years.
The firm expects Cathay's operating margin for the fiscal years 2024 to 2026 to be at a medium-low level, with a yield of 5% to 8% for the fiscal years 2025 to 2026. The firm has raised Cathay's Target Price from 10.8 HKD to 12.1 HKD, assigning a "Buy" rating and maintaining it as the firm's industry favorite.
UBS Group has slightly raised its net profit forecast for Cathay for the fiscal year 2024 by 2% to reflect the decline in RBOB Gasoline prices and better-than-expected freight performance. Although Cathay's passenger yield continues to slow in the second half of 2024, it is still expected to remain at a higher level of 30% above the 2019 levels. Furthermore, considering the lower available seat kilometer (ASK) recovery rate, the firm has slightly lowered Cathay's profit forecast for the fiscal year 2025 by 6%, but due to an increase in assumptions for passenger yield, it has raised the profit forecast for the fiscal year 2026 by 36%. (js/w)
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