According to "The Big Banks," Societe Generale expects Cathay Pacific's valuation to be reassessed, with a rating of "Outperform" and a target price of HKD 13.1

According to a report by Société Générale, Cathay Pacific Airways (00293.HK) recently announced its full-year results for the year ending December last year, with a recurring net profit of HKD 9.565 billion, excluding one-time items such as an impairment reversal of HKD 385 million. It is estimated that Cathay's recurring net profit for the second half of last year was HKD 5.914 billion, which is 9% higher than the bank's forecast of HKD 5.417 billion. The bank believes that Cathay's earnings exceeded expectations mainly due to better-than-expected cargo yield, which was sufficient to offset the disappointing profits from its subsidiary low-cost carrier Hong Kong Express.

Société Générale stated that Cathay has achieved a significant improvement in profitability by consolidating its market position post-pandemic, and with factors such as Hong Kong Express actively increasing capacity, its market share in Hong Kong has increased from 55% in 2019 to 57% in 2024. Due to the concentrated delivery schedule of wide-body aircraft, it is expected that Cathay's free cash flow will improve; however, Cathay is currently trading at an EV/EBITDA of about 5.1 times, which is still significantly lower than the average of about 5.9 times in 2019. The bank believes that the market has not fully recognized Cathay's improved profitability post-pandemic and expects its valuation to be reassessed.

Société Générale has rated Cathay as "Outperform" with a target price of HKD 13.1