HTSC·2026-03-12 02:55Investment Rating - The report maintains a "Buy" rating for Cathay Pacific Airways [6] Core Views - Cathay Pacific Airways reported a revenue of HKD 116.77 billion for 2025, an increase of 11.9% year-on-year, and a net profit attributable to shareholders of HKD 10.83 billion, up 9.5% year-on-year [1] - The company exceeded expectations by HKD 8.6 billion, primarily due to strong passenger performance in the second half of 2025 and non-recurring income of HKD 0.88 billion [1] - The outlook for 2026 is optimistic, with expectations of a significant narrowing of revenue decline due to decreasing supply growth and plans to introduce 25 new aircraft by 2027, increasing fleet capacity by 10.5% [1][5] Summary by Sections Passenger Transport - In the second half of 2025, Cathay Pacific's capacity increased significantly, with ASK/RPK rising by 25.4%/27.9%, reaching 90%/95% of 2019 levels [2] - The passenger load factor improved to 85.6%, up 1.7 percentage points year-on-year, while unit revenue per passenger kilometer saw a reduced decline of 8.2% [2] - Total passenger revenue for the group reached HKD 41.64 billion, a 17.0% increase year-on-year [2] Cargo Transport - Cargo revenue remained stable, with AFTK/RFTK increasing by 8.5%/6.6%, although the load factor decreased by 1.0 percentage points to 58.9% [3] - The overall cargo revenue for the group was HKD 14.81 billion, remaining flat year-on-year [3] Financial Performance - Operating costs for the second half of 2025 were HKD 54.31 billion, up 14.3% year-on-year, but unit non-fuel ATK costs decreased by 2.4% due to improved aircraft utilization [4] - The operating profit margin declined by 0.8 percentage points to 13.7% year-on-year, but net profit attributable to shareholders increased by 15.1% to HKD 7.18 billion [4] - The company announced a total dividend of HKD 0.84 per share, with a payout ratio of 48% [4] Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2026 and 2027 has been raised by 6% and 14% to HKD 9.23 billion and HKD 10.04 billion, respectively [5] - The target price has been adjusted to HKD 17.00, reflecting an increase in valuation to a 2026E PB of 1.8x [5]