[ET Net News Agency, 20 July 2020] Goldman Sachs said the development of "travel
bubbles", allowing international travel to/from Asian countries, has been slower than
expected, with only a handful of business-only arrangements currently in place (e.g.,
China-Singapore, China-Korea).
The research house said governments in the region have been more cautious in opening up
borders and removing restrictions, such as quarantines than Goldman had previously
expected.
Goldman expects this to continue due to a number of key barriers, limiting the chances
of a faster recovery. It cut its forecasts for Asian international traffic deeply, with a
recovery looking difficult before 2022/23.
Goldman now assumed international travel to decline by 87%/55%/2% in 2020/21/22 versus
60%/+1%/+12% previously and cut its EPS estimates for the Asian airlines by 16-94% for
FY2020 and forecast deep losses in FY2021. It revised its target prices as follows:
Name Rating Target Price
-------------------------------------------------------------
Air China (00753) Buy HK$7.2 from HK$7.3
Cathay Pacific (00293) Sell HK$5.7 from HK$6.5
China Eastern Airlines (00670) Buy HK$4 (unchanged)
China Southern Airlines (01055) Buy HK$4.95 (unchanged)

(KL)