Chinese Airlines: Where Is the Cycle Heading?

Research evidence excerpt

Chinese Airlines: Where Is the Cycle Heading?

Idea

May 13, 2026 08:05 PM GMT

Morgan Stanley Asia Limited+MChinese Airlines | Asia Pacific Qianlei Fan, CFA

Equity Analyst

Where Is the Cycle Heading? Qianlei.Fan@morganstanley.comTenny Song +852 2239-1875

Tenny.Song@morganstanley.com +852 3963-1737

Share prices will likely trade against jet fuel dynamics in the near

Hong Kong/China Transportation &

term. Industry up-cycle could resume in the next 6-12 months if Infrastructure

jet fuel gradually normalizes towards ~US$100/bbl level. Spring Asia Pacific

Industry View In-Line

Airlines will relatively outperform in a high oil price environment.

Exhibit 1 : Price target changes

Fundamentals deteriorated amid the energy shock, but likely in the price.

PT Share Implied

Despite China's abundant jet fuel supply and relatively smaller degree of jet fuel Company Ticker Currency Rating New Old Chg % price Upside

CA-H 0753.HK HKD OW 7.70 10.00 -23.0% 5.32 45%

price hikes, we estimate that the current air fare hikes are not enough to cover cost CA-A 601111.SS Rmb OW 8.30 11.10 -25.2% 7.29 14%

CEA-H 0670.HK HKD OW 5.90 8.10 -27.2% 4.38 35%

inflation, indicating near-term margin contraction. Demand has also been affected by CEA-A 600115.SS Rmb OW 5.80 8.10 -28.4% 4.61 26%

CSA-H 1055.HK HKD OW 5.90 8.50 -30.6% 4.43 33%

higher pricing, in our view. Share prices have corrected - outperformance since Oct- CSA-A 600029.SS Rmb OW 6.70 9.71 -31.0% 5.71 17%

SPA 601021.SS Rmb OW 67.20 69.40 -3.2% 47.93 40%

26 has been erased despite upbeat 1Q26 earnings.

Source: Morgan Stanley Research. Note: Share prices as of May 11, 2026.

Jet fuel the major moving factor affecting 12-18 month outlook. After peaking at

~US$230/bbl in late March, jet fuel prices have corrected by over 30% as of May 12,

2026.