Everbright Securities has issued a research report stating that it expects Cathay Pacific (00293) to report operating revenue of HK$144.2 billion, HK$150.9 billion, and HK$160.0 billion for 2026 to 2028, respectively, with net profit attributable to shareholders of HK$12.5 billion, HK$11.7 billion, and HK$12.8 billion, corresponding to EPS of HK$2.06, HK$1.93, and HK$2.10.
Based on relative valuation, the firm assigns a target PE of 8.60 times for 2026, corresponding to a target price of HK$17.74. The FCFF model yields a fair value per share of HK$16.70, implying approximately 24% upside from the target price. This is an initial coverage with a "Buy" rating.
The key views from Everbright Securities are as follows.
Hong Kong Hub Connects the World, Four Major Segments Build a Comprehensive Aviation Ecosystem
The Cathay Group centers on Hong Kong International Airport and has formed four major business segments: Cathay Pacific, Cathay Cargo, HK Express, and Lifestyle, covering premium full-service aviation, low-cost aviation, air cargo, and non-aviation consumer scenarios. Leveraging Hong Kong's geographical advantage in connecting mainland China with global markets, combined with the support of two strategic shareholders, Swire Group and Air China, the company continues to strengthen its competitiveness in international transit, premium passenger services, and global cargo networks.
International Passenger Traffic Continues to Recover, Dual-Brand Synergy Releases Profit Flexibility
In the first half of 2026, the company achieved operating revenue of HK$68.1 billion, a year-on-year increase of 25.3%, with net profit attributable to shareholders of HK$6.2 billion, a year-on-year increase of 71.0%. Profit growth was notably faster than revenue growth. During the same period, the load factor of the Cathay main brand rose to 87.5%, and capacity expansion was well absorbed. HK Express, relying on Asia's short-haul leisure market and complementing Cathay Pacific, saw its operating loss narrow from HK$524 million in the same period last year to HK$73 million in the first half of 2026. As routes mature, load factors improve, and the impact of the engine supply chain eases, the low-cost carrier business is expected to become a new profit growth driver for the group.
Scarce Cargo Asset Endowment, High-Value Demand Enhances Operational Resilience
The Cathay Group has formed an integrated cargo system of "passenger belly hold + intercontinental full freighters + regional express freighters + air cargo terminals," operating 34 wide-body freighters. In 2025, cargo revenue reached HK$27.572 billion, accounting for 23.6% of the group's revenue, significantly higher than major listed airlines in China. Hong Kong International Airport handled 5.07 million tonnes of cargo and mail in 2025, maintaining its global leadership. With growing cross-border transport demand for AI servers, semiconductor equipment, and high-tech electronic products, the company is expected to continue capturing high-value cargo sources through its Hong Kong hub, wide-body freighters, and global route network.
Hundred-Aircraft Order Drives Fleet Renewal, Capacity Expansion Opens Long-Term Space
As of June 2026, the Cathay Group owned 235 aircraft and held 105 pending delivery orders, covering models such as the Boeing 777-9, A330-900, A350F, and A320/A321neo. Future new aircraft deliveries will gradually replace older aircraft, reducing unit fuel consumption and maintenance costs, and supporting the expansion of international long-haul, regional passenger, low-cost aviation, and cargo networks. The group plans to continue increasing investment in fleet, cabins, lounges, and digitalization, with the long-term number of destinations expected to expand to 150, providing a capacity foundation for revenue and profit growth.
Risk Warnings
Significant fluctuations in jet fuel prices and exchange rates; declining passenger and cargo yields; international travel demand falling short of expectations; HK Express turning profitable slower than expected; delays in engine supply chain and aircraft deliveries.