Daiwa: Lowers the target price for TRAVELSKY TECH to HKD 13, recovery is gradual, reiterates "Buy" rating
Daiwa released a research report stating that the recovery of China Civil Aviation Information Network is gradual, and it holds an optimistic attitude towards its system integration business, but expects the recovery of international airlines to be slow; it has lowered its revenue forecast for 2025 to 2027 by 4% to 5%, mainly due to the slower-than-expected recovery in tourism. Daiwa has reduced the company's earnings per share forecast for 2025 to 2027 by 16% to 17% to reflect the lower-than-expected performance in the first half of 2025, reiterating a "Buy" rating for the company, with a target price lowered from HKD 13.5 to HKD 13. The report states that the company's management pointed out that several changes in the post-pandemic period have dragged down the company's recent profitability, including low handling volume from international airlines, which previously had higher average unit prices and profit margins than domestic airlines; the revenue contribution from the system integration business is about 20% (compared to double digits before the pandemic); employee costs for 2023 to 2024 have increased to over RMB 2 billion (averaging RMB 1.8 billion from 2017 to 2019). The firm noted that despite adjusting the company's revenue forecast, it reiterated the company's future operational leverage potential, as fixed costs account for 60% to 70% of total operating costs. In addition, Daiwa emphasized that management has intensified cost control efforts (especially employee costs) to improve the company's profitability
According to Zhitong Finance APP, Daiwa released a research report stating that the recovery of China Civil Aviation Information Network (00696) is gradual, and they hold an optimistic attitude towards its system integration business, but expect a slow recovery for international airlines; they have lowered their revenue forecasts for 2025 to 2027 by 4% to 5%, mainly due to the slower-than-expected recovery in tourism. Daiwa has reduced the company's earnings per share estimates for 2025 to 2027 by 16% to 17% to reflect the lower-than-expected performance in the first half of 2025, reiterating a "Buy" rating for the company, with a target price lowered from HKD 13.5 to HKD 13.
The report states that the company's management pointed out that several changes in the post-pandemic period have dragged down the company's recent profitability, including low handling volume for international airlines, which previously had higher average prices and profit margins than domestic airlines; the revenue contribution from the system integration business is about 20% (compared to double digits before the pandemic); employee costs are expected to exceed RMB 2 billion from 2023 to 2024 (averaging RMB 1.8 billion from 2017 to 2019).
The firm noted that despite adjusting the company's revenue forecasts, they reaffirmed the company's future operational leverage potential, as fixed costs account for 60% to 70% of total operating costs. Additionally, Daiwa emphasized that management has intensified cost control efforts (especially regarding employee costs) to improve the company's profitability
