[ET Net News Agency, 3 July 2020] Credit Suisse said domestic recovery has been
temporarily disrupted by tightened controls affecting flights to Beijing from mid-June but
the trend has seen some sequential stabilisation.
In June, domestic flight capacity resumed to about 70% level (May 65%).
The research house noted that more international flights have resumed but the recovery
remains gradual. Capacity has slightly resumed to roughly about 5% of the normal level in
June (May 2%). Imported Covid cases remain the key risk and their recovery pace depends on
when the restrictions will be lifted.
Meanwhile, oil price has recovered on production cuts but still lower than last year.
With new oil price assumption and slow international traffic, Credit Suisse cut FY2020-21
earnings forecasts for the airlines/airports and also lowered their target prices by 2-10%
as follows:
Name Rating Target Price
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Air China (00753) Outperform HK$6.5 from HK$7.2
China Eastern Airlines (00670) Outperform HK$3.6 from HK$4.0
China Southern Airlines (01055) Outperform HK$4.3 from HK$4.7
Cathay Pacific (00293) Underperform HK$7.0 from HK$7.1
Beijing Airport (00694) Outperform HK$6.4 from HK$6.6
(KL)