Citigroup: Cathay Pacific Airways (00293) core profit for the first half of the year exceeds expectations, maintaining a "buy" rating.

Citigroup released a research report stating that CATHAY PAC AIR (00293) is expected to record a shareholder comprehensive profit attributable to shareholders of approximately 6 to 6.5 billion HKD for the six-month period ending on June 30, 2026. After deducting non-cash income of approximately 1.4 billion HKD due to the reduction of equity in Air China Limited (00753), the core profit is estimated to be around 4.6 to 5.1 billion HKD, much higher than the market's expectation of around 3.3 billion HKD. Based on the median profit guidance, the bank estimates that Cathay's core profit for the first half of the year will increase by about 33% year-on-year. Citigroup expects the market to have room to increase its full-year profit forecast for Cathay in 2026, maintains a "buy" rating with a target price of 16.2 HKD, and lists it as the top aviation stock in the Asia-Pacific region. Citigroup believes that despite a significant year-on-year increase in aviation fuel prices of about 55%, Cathay can still achieve strong profit growth, reflecting its ability to effectively pass on costs to customers and successfully capture the demand shift brought on by the situation in the Middle East. The bank estimates that excluding one-time projects, narrowing losses from joint ventures, and fuel costs, the overall (passenger and freight combined) unit revenue for Cathay in the first half of the year increased by about 14% year-on-year, with the growth rate possibly even higher in the second quarter alone.