Everbright Securities: Initial Purchase Rating Target Price of HK$17.74 for Cathay Pacific (00293)
The Zhitong Finance App learned that Everbright Securities released a research report stating that the bank expects Cathay Pacific (00293)'s revenue from 2026 to 2028 to be HK$1442/1509/160 billion, respectively, with net profit to mother of HK$125/117/12.8 billion, and corresponding EPS of HK$2.06/1.93/2.10, respectively. The relative valuation gave the company a target PE of 8.60 times in 2026, corresponding to a target price of HK$17.74; the FCFF model measured a reasonable value of HK$16.70 per share, and the target price corresponds to an increase of about 24%. First coverage, giving a “buy” rating.
The main views of Everbright Securities are as follows:
Hong Kong's hub links the world, and four major sectors build a comprehensive aviation ecosystem
With Hong Kong International Airport as its core, the Cathay Pacific Group has formed four major business segments: Cathay Pacific, Cathay Pacific Cargo, Hong Kong Express and Lifestyle, covering high-end full-service aviation, low-cost airlines, air cargo and non-aviation consumption scenarios. The company relies on Hong Kong's location advantages connecting mainland China and the global market, and is empowered by two strategic shareholders, Pacific Group and Air China, to continue to strengthen the competitiveness of international transit, high-end passenger transport and global freight networks.
International passenger transport continues to recover, and the two brands collaborate to unleash profit flexibility
In the first half of 2026, the company achieved operating income of HK$68.1 billion, up 25.3% year on year; net profit to mother was HK$6.2 billion, up 71.0% year on year, and profit growth rate was significantly faster than revenue. The passenger occupancy rate of Cathay Pacific's main brands increased to 87.5% during the same period, and capacity expansion was better digested. Hong Kong Express relies on the Asian short-haul leisure market to complement Cathay Pacific. Operating losses in the first half of 2026 have narrowed from HK$524 million in the same period last year to HK$73 million. As routes mature, passenger occupancy rates increase, and the impact on the engine supply chain mitigates, the low-cost airline business is expected to become a new profit growth point for the Group.
Freight asset endowments are scarce, and high-value demand enhances operational resilience
Cathay Pacific Group formed an integrated cargo system of “passenger aircraft cabin+intercontinental freighter+regional express freighter plus air cargo terminal”. In 2025, cargo revenue reached HK$27.572 billion, accounting for 23.6% of the group's revenue, which is significantly higher than that of major domestic listed airlines. Hong Kong International Airport completed 5.07 million tons of cargo and mail throughput in 2025, continuing to lead the world. As demand for cross-border transportation of AI servers, semiconductor equipment and high-tech electronic products grows, the company is expected to continue to accept high-value supplies with Hong Kong hubs, wide-body freighters, and a global route network.
The order of 100 aircraft boosts fleet renewal, and capacity expansion opens up long-term space
As of June 2026, the Cathay Pacific Group has 235 aircraft and 105 orders awaiting delivery, covering models such as the Boeing 777-9, A330-900, A350F, and A320/A321neo. Future deliveries of new aircraft will gradually replace old aircraft, reduce unit fuel consumption and maintenance costs, and support the expansion of international long-haul, regional passenger transport, low-cost aviation and cargo networks. The Group plans to continue to increase investment in the fleet, cabins, lounges and digitalization. The number of long-term destinations is expected to expand to 150, providing a capacity foundation for revenue and profit growth.
Risk Alerts
Aviation fuel prices and exchange rates fluctuated greatly; passenger and freight yields declined; demand for international travel fell short of expectations; Hong Kong Express's losses fell short of expectations; and engine supply chains and aircraft deliveries were delayed.