UBS: Rated CATHAY PAC AIR (00293) as "buy" with a target price raised to 12.1 Hong Kong dollars.

UBS released a research report, stating a "buy" rating for CATHAY PAC AIR (00293) and maintained it as their top pick in the industry, with the target price raised from 10.8 Hong Kong dollars to 12.1 Hong Kong dollars. The bank predicts that Cathay's operating profit margin for fiscal years 2024 to 2026 will be at a medium-low level, with a profit margin of 5% to 8% for the years 2025 to 2026. The report mentions that despite a nearly 30% increase in the stock price since CATHAY PAC AIR announced a convertible bond buyback, UBS remains optimistic about Cathay, believing the company is in a favorable position and can achieve operating profit margins above trend in the coming years. UBS has slightly revised upwards by 2% its net profit forecast for Cathay for the fiscal year 2024 to reflect lower fuel prices and better than expected cargo performance. The bank notes that although Cathay's passenger revenue is slowing down in the second half of 2024, it is still expected to remain at a high level above 30% of the 2019 level. Additionally, considering the lower Available Seat Kilometers (ASK) recovery rate, UBS has slightly reduced its profit forecast for the fiscal year 2025 by 6%, but due to the bank's assumption of an increase in passenger revenue, the profit forecast for the fiscal year 2026 has been raised by 36%.