[ET Net News Agency, 31 October 2019] Huatai Research lowered its target price for Air
China (00753) to HK$9.7 from HK$10.5 to reflect the lower ROE (return on equity) and the
lower demand and maintained its "buy" rating.
The research house said Air China's 3Q net profit was in line with Huatai's
expectations. The decline in revenue was mainly due to the divestiture of Air China Cargo.
While weak demand led to disappointing yields, lower oil prices eased cost pressure.
But Huatai is concerned about the current supply-demand dynamics; consequently. It cut
its net profit 2019/20/21 forecasts by 10.6/14.7/12.6% to RMB8,315mn/12,852mn/17,959mn.
However, with Daxing Airport already in operation, Huatai believes Air China will enjoy
improved market share and higher yields at Beijing Capital International Airport (00694).
(KL)