UBS Global Research lowered its target price for Cathay Pacific (00293) to HK$12.6 from HK$13.9 and maintained its "buy" rating.
The research house said CX carried 7% less passengers versus last year in September 2019. As the fall was mainly on short-haul markets, the total passenger traffic (RPK) held up flat YoY but substantially below the 10% capacity (ASK) growth. The passenger load factor (PLF) was down 7.2 ppts to 73.6%.
Management also indicated its China market during the National Day travel peak was very weak. Transit traffic via Hong Kong is relatively stable but an increasing skew towards this segment has put additional pressure on yields.
UBS cut its 2019 RPK growth to 4% from 6% (versus 9-month's 4.7%) leading to 57% reduction to the 2019 net profit, which faces further downside risk if there is no sign of recovery before year-end.
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