Jefferies Research lowered its target price for Cathay Pacific Airways (00293) to HK$12.5 from HK$15 and maintained its "buy" rating.
The research house estimate CX's 2H loss of HK$973mn, based on pax traffic and yields to decline by 4.5% and 6% with 1% increase in pax capacity. It estimated that a 1% change in pax traffic and yields leads to HK$288mn and HK$236mn earnings change for 2H.
Jefferies expects pax traffic and yield pressure to remain near-term headwinds, but pax traffic rebounds quickly post-downturns. This, combined with capacity cuts, leads to 2020 returning to profit after 2H 2019 losses.
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