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<Research>Citi Downgrades CHINA EAST AIR and CHINA SOUTH AIR, Cuts TP for AIR CHINA
Recommend 19 Positive 16 Negative 22 |
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Citi commented in its research report that China's aviation industry experienced high volume but weak pricing this summer. According to CAAC statistics, passenger traffic grew 12% YoY, 18% higher than in 2019. Although international capacity recovered to 77% of the 2019 level, prices returned to normal much faster than expected. The average price of economy class after tax dropped 11% compared to last year. Citi mentioned that the industry's yield within the Asia region is also facing challenges. The three major airlines were conservative in their capacity allocation in July 2024, but outbound capacity recovery was strong. Overall, the industry's performance this summer was somewhat disappointing. In addition, based on 2Q results, business travel demand remains weak and may not support prices during the off-peak season with increased capacity. The broker downgraded CHINA EAST AIR (00670.HK) from Buy to Sell, with a TP trimmed from $2.53 to $1.7. CHINA SOUTH AIR (01055.HK) was downgraded from Buy to Neutral, with a TP reduced from $3.8 to $2.8. Although the broker maintained a Buy rating on AIR CHINA (00753.HK) and the company as its top pick, it lowered the TP for the company from $5.35 to $3.8. AAStocks Financial News |
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