UBS: CATHAY PAC AIR (00293) September demand healthy, positive outlook extended to Q4, reiterates "Buy"

UBS issued a research report stating that CATHAY PAC AIR (00293) released its September operating data, recording healthy demand in a traditionally quieter month, with both passenger and cargo continuing to grow, and management extending its positive outlook into the fourth quarter of this year; the bank reiterates its "Buy" rating and target price of HK$19.4. The bank noted that the group's passenger traffic (RPK) grew 10.6% year-on-year, higher than the 9.1% year-on-year capacity (ASK) expansion, improving the passenger load factor by 1.1 percentage points year-on-year to 82.4%. Full-service carrier (Cathay) passenger traffic grew 11.4% year-on-year, benefiting from outbound student travel in early September and leisure demand during the Mid-Autumn and National Day golden week holidays, with management stating that premium leisure and business demand remained resilient throughout the month. Low-cost carrier (HK Express) saw passenger growth slow after the summer holidays, with RPK up only 2.2% year-on-year, below the 10.1% capacity expansion, and load factor falling 5.2 percentage points year-on-year to 67.5%. Management expects passenger demand at both full-service and low-cost carriers to remain healthy in the fourth quarter. On cargo, freight volume (RFTK) grew 8.6% year-on-year, supported by demand from the mainland and Southeast Asia, with time-sensitive shipments from Southeast Asia driving priority freight and semiconductor cargo flows continuing. Management expects cargo demand to strengthen further with the traditional year-end air freight peak season.