Cathay Pacific (293 HK) Buy: Powered by premium and freight

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Cathay Pacific (293 HK) Buy: Powered by premium and freight

ressure. On the cargo front, CX expected June demand to stay resilient, with the

52-WEEK PRICE (HKD)

Baltic Air Freight Index Hong Kong outbound up 34% y-o-y in 2Q to date, pointing to

sustained freight yield tailwinds. Besides, Brent has dropped 45% from its early April 16.00

peak. We see these as constructive signals for CX's earnings trajectory heading into 3Q. 12.75

Change in estimates. We reflect the HKD1.4bn one-off gains from Air China’s A share 9.50

06/25 12/25 06/26

issuance. We model for an c80% pass through of oil price for CX in 2026e. We calculate Target price: 15.30 High: 14.06 Low: 10.18 Current: 11.94

a 10% increase in the fuel price could reduce CX’s 2026e recurring profit by 13% and

drag down ROE by 1.8ppt. For 1H26e, we model EBIT to decline 9% y-o-y to HKD5.4bn. Source: LSEG IBES, HSBC estimates

We are 3% above consensus on recurring profit level for 2026e. Note CX's 1H26 results

Parash Jain*

are expected to be released in early August. Global Head of Transport & Logistics Research

The Hongkong and Shanghai Banking Corporation Limited

One-off gains boost DPS. CX expects a HKD1.4bn deemed disposal gain in 1H26 from parashjain@hsbc.com.hk

the dilution of Air China’s stake following Air China's A-share issuance. While non- +852 2996 6717

operational, this gain bolsters reported profit, and more importantly, increases potential Deepak Maurya*, CFA

Analyst, Asia Transport

for higher DPS, which we model for HKD31 cents in 1H26 vs HKD21 cents in 1H25. The Hongkong and Shanghai Banking Corporation Limited

deepakmaurya@hsbc.com.hk

Retain Buy with unchanged HKD15.30 TP (PB-derived). We think in the near term, +852 2822 4292