Core Viewpoint - Hong Kong Express, following Cathay Pacific, will adjust its passenger fuel surcharge starting March 18, with the surcharge for flights departing from Hong Kong set at HKD 290 due to rising aviation fuel prices influenced by recent Middle East tensions [1] Group 1: Company Actions - Hong Kong Express will implement a fuel surcharge adjustment for its passenger flights [1] - The new surcharge for flights departing from Hong Kong will be HKD 290 [1] Group 2: Industry Context - The increase in aviation fuel prices is a significant factor affecting the operational costs of airlines [1] - The decision to adjust the fuel surcharge comes after a careful assessment of recent fuel price trends and the overall operational environment [1]

Core Viewpoint - Hong Kong Express, following Cathay Pacific, will adjust its passenger fuel surcharge starting March 18, with the surcharge for flights departing from Hong Kong set at HKD 290 due to rising aviation fuel prices influenced by recent Middle East tensions [1] Group 1: Company Actions - Hong Kong Express will implement a new passenger fuel surcharge of HKD 290 for flights originating from Hong Kong [1] - The adjustment will vary for other routes based on the applicable departure location and local currency [1] Group 2: Industry Context - The airline industry is facing significant increases in aviation fuel prices, which are a major operational cost for airlines [1] - The decision to adjust the fuel surcharge comes after a careful assessment of recent fuel price trends and the overall operational environment [1]

Financial Data and Key Metrics Changes - The underlying profit increased by 9% to HKD 11.4 billion, driven by capital recycling and strong recurring profit in aviation [4] - The ordinary dividend rose by 13%, reflecting the company's strong financial health and available liquidity [4][12] - The recurring underlying profit was HKD 9.8 billion, up 5% from the previous year, supported by high demand for air travel [5] Business Line Data and Key Metrics Changes - Swire Properties' underlying profit increased by 27%, primarily due to gains from the disposal of non-core assets [16] - The aviation segment saw a 19% increase in recurring profit, with HAECO achieving a 73% growth in recurring profit due to demand for maintenance services [6][30] - The beverage division's recurring attributable profit was HKD 1.39 billion, broadly in line with the previous year, despite a challenging environment [21] Market Data and Key Metrics Changes - The Hong Kong office market maintained steady occupancy levels, benefiting from a flight to quality trend [5] - In the Chinese mainland, the beverage segment's recurring profit increased by 1%, while Hong Kong's performance strengthened with a 14% rise in recurring profit [22] - The Vietnam and Cambodia markets faced a 35% decrease in attributable recurring profit due to a difficult operating environment [24] Company Strategy and Development Direction - The company continues to focus on disciplined execution of its HKD 100 billion investment plan across core markets, particularly in the Greater Bay Area [2][18] - Swire Coca-Cola plans to invest over RMB 12 billion in production facilities and logistics infrastructure over the next decade [26] - The strategy includes capital recycling of non-core assets and exiting underperforming businesses to enhance overall returns [11][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving consumer sentiment in both the Chinese mainland and Hong Kong, anticipating a positive contribution from residential projects [34] - The aviation sector is expected to grow, with Cathay Pacific planning to expand capacity and frequency [36] - Challenges remain in Southeast Asia, particularly in Thailand, due to economic softness and competition [35] Other Important Information - The company reported a healthy liquidity position with HKD 64 billion in group liquidity and a gearing ratio of 20.6% [12] - Sustainability initiatives are progressing well, with significant reductions in water withdrawal and waste diversion [15] Q&A Session Summary Question: Shareholder return and dividend policy - Management indicated confidence in the progressive dividend policy, expecting mid-single-digit constant improvement barring significant disruptions [40][41] Question: Beverage business improvement drivers for 2026 - Management highlighted improving consumer sentiment and structural changes in purchasing channels as key drivers for the beverage business in 2026 [43][44] Question: Impact of Middle East disruptions and healthcare investment updates - Management noted that the primary impact from Middle East disruptions is on Cathay Pacific, with no significant effects expected on other parts of the group [58] - The healthcare investment strategy remains focused on long-term fundamentals, with patience emphasized in navigating high valuations [59]

Group 1 - The core profit of Cathay Pacific (00293) for the second half of the year reached HKD 6.1 billion, representing a year-on-year increase of 7% [1] - Excluding contributions from joint ventures, the core profit was HKD 5.4 billion, which is a 43% increase compared to the first half and an 8% year-on-year growth [1] - The full-year performance met 107% and 108% of Citigroup and market forecasts, respectively [1] Group 2 - Citigroup maintains a "sell" rating for Cathay Pacific, primarily due to weak growth in outbound tourism from China, setting a target price of HKD 11.2 [1] - Prior to the escalation of tensions in the Middle East, Cathay Pacific reported strong passenger load factors for long-haul flights, with a surge in short-term demand for routes to Europe and Australasia [1] - The airline has hedged 30% of its expected fuel consumption for 2026 at a price of USD 70 per barrel, exposing it to risks from widening fuel crack spreads [1] Group 3 - If spot aviation fuel prices rise by USD 10 from USD 78 per barrel, Cathay Pacific would need to increase passenger unit revenue by approximately 10% in Europe, Australasia, and South Asia to offset the impact of rising fuel costs [2] - For essential travelers, this price increase is feasible in the short term (1-2 months), but the global ticket price demand elasticity is -0.87, indicating that price hikes could lead to a decrease in travel demand [2]

Core Viewpoint - Bank of America Securities reports that Cathay Pacific (00293) is expected to exceed market consensus for net profit in 2025, primarily due to a one-time settlement gain from HAECO and reduced interest costs from last year's rate cuts [1] Group 1: Financial Performance - The expected net profit for Cathay Pacific in 2025 is bolstered by a one-time settlement gain from HAECO and a decrease in interest costs due to last year's rate cuts [1] - Unit revenue and unit costs are largely in line with Bank of America's expectations [1] Group 2: Operational Outlook - Cathay Pacific aims for a 10% growth in passenger capacity by 2026 [1] - The cargo business has had a strong start in the first two months of 2026 [1] Group 3: Risks and Ratings - Rising fuel costs present a risk, with approximately 30% of Brent crude oil usage for Q1 2026 already hedged [1] - Bank of America maintains a "underperform" rating for Cathay Pacific, indicating that the spread risks in passenger and fuel costs have not yet been reflected in the stock price [1] - The target price for Cathay Pacific is set at HKD 10.9 [1]

Core Viewpoint - Several airlines in China have canceled flights to Dubai after briefly resuming them, indicating ongoing operational challenges in the region due to safety concerns and geopolitical tensions [1][4]. Group 1: Flight Operations - Airlines such as Air China, China Eastern Airlines, and China Southern Airlines had resumed some flights to Dubai but have now canceled all flights from March 13 to March 31, with the earliest available tickets for April 1 [2][3]. - Emirates Airlines continues to operate some flights to and from Dubai, including routes to major Chinese cities like Beijing, Shanghai, and Guangzhou [5]. Group 2: Safety and Geopolitical Context - A recent incident involving two drones crashing near Dubai International Airport resulted in injuries to several individuals, prompting airlines to conduct safety assessments before resuming flights [4]. - The Chinese Ministry of Foreign Affairs reported that over 10,000 Chinese travelers have safely returned from countries in the Middle East, including the UAE, Oman, and Saudi Arabia, amid ongoing military conflicts in the region [6].

Investment Rating - The report assigns a rating of "Accumulate-H" to Cathay Pacific Airways (00293.HK) with a current price of HKD 13.17 and a fair value of HKD 14.0 [9]. Core Insights - The company's earnings exceeded expectations, driven by a recovery in passenger demand and one-time gains, resulting in a net profit of HKD 10.828 billion for 2025, a year-on-year increase of 9.5%. Revenue reached HKD 116.766 billion, up 11.9% year-on-year. Passenger and cargo revenues were HKD 78.85 billion and HKD 27.57 billion, respectively, reflecting increases of 15.0% and 0.6% [9]. - Operational metrics showed significant recovery, with passenger numbers rising to 28.871 million, a 26.5% increase year-on-year. The ASK/RPK metrics increased by 25.8% and 28.9%, respectively, with a load factor improvement of 2 percentage points to 85.2% [9]. - The recovery in capacity led to an increase in operating costs, with total expenses rising by 11.8% year-on-year. Key cost components such as fuel, employee, and landing fees increased by 10.9%, 19.2%, and 22.7%, respectively. However, the unit cost per ATK decreased by 1.7% to HKD 2.32 due to improved aircraft utilization [9]. - Future profit forecasts estimate net profits of HKD 9 billion, HKD 11.7 billion, and HKD 12.561 billion for the years 2026, 2027, and 2028, respectively, with a target price based on a 10x PE ratio for 2026 [9]. Financial Summary - Revenue projections for the upcoming years are as follows: HKD 104.371 billion for 2024, HKD 116.766 billion for 2025, HKD 131.593 billion for 2026, HKD 136.044 billion for 2027, and HKD 143.379 billion for 2028, with growth rates of 10.5%, 11.9%, 12.7%, 3.4%, and 5.4% respectively [5]. - The EBITDA figures are projected to be HKD 26.516 billion for 2024, HKD 26.999 billion for 2025, HKD 26.835 billion for 2026, HKD 30.504 billion for 2027, and HKD 32.868 billion for 2028 [5]. - The earnings per share (EPS) are expected to be HKD 1.54 for 2024, HKD 1.68 for 2025, HKD 1.40 for 2026, HKD 1.82 for 2027, and HKD 1.95 for 2028 [5].

Core Viewpoint - The article discusses the recent cancellations of flights to Dubai by several Chinese airlines, highlighting the impact of safety concerns following drone incidents near Dubai International Airport [3][7]. Group 1: Flight Cancellations - Starting from March 13, several Chinese airlines, including Air China and China Eastern Airlines, have canceled flights to Dubai, with no flights scheduled until April 1 [4][6]. - The initial resumption of flights was limited and involved safety assessments for each flight rather than a full restoration of regular services [7]. Group 2: Safety Concerns - On March 11, two drones crashed near Dubai International Airport, resulting in injuries to three individuals, which has raised safety concerns for airlines operating in the region [7]. - The Chinese Ministry of Foreign Affairs has advised citizens to avoid traveling to countries affected by military conflicts in the Middle East, including Iran [9]. Group 3: Current Operations - Emirates Airlines continues to operate some flights to and from Dubai, including routes to major Chinese cities like Beijing, Shanghai, and Guangzhou [8]. - Cathay Pacific has announced that its flights from Hong Kong to Dubai and Riyadh are expected to remain suspended until the end of March [9].

Core Viewpoint - China Eastern Airlines has experienced a significant decline in stock price this year, with a drop of 22.33% year-to-date and 25.80% over the past 20 trading days [4][5]. Financial Performance - For the period from January to September 2025, China Eastern Airlines reported a revenue of 1,064.14 billion yuan, representing a year-on-year growth of 3.73% [6]. - The net profit attributable to shareholders for the same period was 21.03 billion yuan, showing a remarkable increase of 1,623.91% year-on-year [6]. Stock Market Activity - As of March 12, the stock price was 4.66 yuan per share, with a trading volume of 4.79 billion yuan and a turnover rate of 0.60% [4]. - The stock has seen a net inflow of 711.59 million yuan from major funds, with significant buying and selling activity noted [4]. Shareholder Information - As of September 30, 2025, the number of shareholders was 149,900, a decrease of 3.37% from the previous period [6]. - The top ten circulating shareholders include China Securities Finance Corporation with 430 million shares and Hong Kong Central Clearing Limited with 295 million shares, the latter having decreased by 5.45 million shares [7]. Dividend History - Since its A-share listing, China Eastern Airlines has distributed a total of 32.96 billion yuan in dividends, but there have been no dividends paid in the last three years [7].

Investment 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]