UBS Reiterates Buy Rating on Cathay Pacific with HK$19.4 Target Price

UBS has released a research report stating that Cathay Pacific (HK: 00293) reported its September operating data, showing healthy demand even during a traditionally quieter month, with both passenger and cargo traffic continuing to grow. Management has extended its positive outlook into the fourth quarter of this year. The bank reiterates its Buy rating and target price of HK$19.4.

The bank noted that the group's passenger traffic (RPK) grew 10.6% year-on-year, outpacing capacity (ASK) expansion of 9.1% year-on-year, which improved the passenger load factor by 1.1 percentage points year-on-year to 82.4%. Full-service carrier Cathay's passenger traffic rose 11.4% year-on-year, benefiting from outbound student travel in early September as well as leisure demand during the Mid-Autumn Festival and National Day golden week holidays. Management indicated that premium leisure and business demand remained resilient throughout the month.

Low-cost carrier Hong Kong Express saw passenger growth slow after the summer holidays, with RPK rising only 2.2% year-on-year, below capacity expansion of 10.1%, while its load factor fell 5.2 percentage points year-on-year to 67.5%. Management expects passenger demand for both full-service and low-cost carriers to remain healthy in the fourth quarter.

On the cargo side, freight volume (RFTK) increased 8.6% year-on-year, supported by demand from mainland China and Southeast Asia. Time-sensitive shipments from Southeast Asia drove priority freight, while semiconductor cargo flows also continued. Management expects cargo demand to strengthen further with the traditional year-end air freight peak season.

Where to start

Investors looking to act on this research may consider monitoring Cathay Pacific's upcoming monthly operating data for confirmation of management's fourth-quarter guidance.

Why focus on Cathay Pacific?

The airline's dual exposure to recovering passenger demand and resilient cargo flows positions it as a key beneficiary of ongoing normalization in regional travel and trade activity.