Zhi Tong Cai Jing·2026-02-10 07:09Core Viewpoint - Morgan Stanley's research report indicates a cyclical improvement in the airline industry starting in Q4 2025, likely gaining momentum in 2026-2027 driven by demand [1] Group 1: Airline Sector Outlook - Investor positioning and confidence remain low, but pricing increases are expected to boost market sentiment, leading to a 42% average target price increase for the airline sector [1] - The three major Chinese airlines' A-share ratings have been upgraded to "Overweight" [1] Group 2: Target Price Adjustments - China National Aviation Holdings (601111) H-share target price raised from HKD 8.11 to HKD 10 [1] - China Eastern Airlines (00670) H-share target price raised from HKD 4.31 to HKD 8.10 [1] - China Southern Airlines (600029) H-share target price raised from HKD 5.33 to HKD 8.50 [1] Group 3: Performance Expectations - Annual passenger load factor is expected to improve by 1-2 percentage points, indicating stronger pricing power for airlines [2] - A positive outlook on a multi-year supply-driven upcycle for Chinese airlines, with potential for profit margins to increase if pricing performs better than expected [2] - For 2026, passenger kilometer revenue is expected to remain flat, followed by a price increase of 3%-4% in 2027 [2] - Profit forecasts for 2027 are 17% higher than market consensus [2] - A 1% increase in passenger kilometer revenue could lead to an average operating profit increase of approximately RMB 1.5 billion to 1.7 billion for the three major airlines [2] - Pre-tax profit forecasts for 2026 have been raised by 14%-20%, and for 2027 by 11%-12% [2]