Hong Kong’s flagship carrier Cathay Pacific Airways posted the highest operating profit in the first half of the year since 1996, and reported better-than-expected results for the first time since the reopening of Hong Kong border after the COVID-19 pandemic, Morgan Stanley said in a report.
Given other unfavorable factors, including the investment loss from Air China, decreased income from fuel hedging, subdued demand due to global and mainland Chinese economic downturn, the results are seen as uplifting, the broker said.
Due to the strong first-half results, Morgan Stanley increased the forecast of Cathay Pacific’s earnings in 2023 – 2025 by 145%, 94%, 67%, respectively,, which are 20% – 32% above consensus. It raised the target price from HK$10.7 to HK$12, rating maintained at Overweight, as the market has yet to fully price in the earnings up-cycle and potential catalyst of a dividend payment, it said.
Cathay Pacific’s shares edged down 0.12% to close at HK$8.55 on Friday.