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<Research> Huatai Securities Lifts CHINA SOUTH AIR (01055.HK) TP to HKD6.1, Maintains Buy
Huatai Securities issued a report noting that CHINA SOUTH AIR (01055.HK) announced its first-quarter results, with revenue of RMB47.782 billion, up 10.1% YoY. The company swung to ...
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<Research> Huatai Securities Lifts CHINA SOUTH AIR (01055.HK) TP to HKD6.1, Maintains Buy
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Huatai Securities issued a report noting that CHINA SOUTH AIR (01055.HK)  +0.010 (+0.235%)    Short selling $2.90M; Ratio 9.644%   announced its first-quarter results, with revenue of RMB47.782 billion, up 10.1% YoY. The company swung to a net profit of RMB1.481 billion from a net loss of RMB747 million in the same period last year. First-quarter net profit was below the brokers forecast of RMB1.85 billion, mainly due to unit ex-fuel costs slightly exceeding expectations.

The report stated that international oil prices remain a key market focus. However, Chinese airlines may be better positioned to pass on rising fuel costs to passengers. Meanwhile, constrained transit at Middle Eastern international hubs may lead to spillover in passenger and cargo demand to the mainland civil aviation industry. Over the medium to long term, the industry is expected to recover from the cyclical trough, driving the company into a new earnings cycle. The Buy rating is maintained.

Related News HSBC Research: Mainland Travel Demand Persists but Shifts to Rail; Big Three Airlines Expected to Post Losses in 2Q26
On stronger-than-expected fuel cost pass-through, the broker raised its 2026 earnings forecast to a profit of RMB1.567 billion, compared with its previous estimate of a loss of RMB2.376 billion. Earnings forecasts for 2027 and 2028 were lifted by 16% and 10% to RMB6.929 billion and RMB11.682 billion, respectively. The broker forecast 2026 book value per share (BPS) at RMB2.05. Based on the companys 10-year historical average price-to-book (PB) ratios of 2.3x for A shares and 1.4x for H shares, and considering potential industry recovery after oil prices stabilize, which may support breakthroughs in profitability such as ROE, it maintained a premium valuation of 3.8x/2.6x 2026 PB for A/H shares. The A-share TP was raised from RMB6.95 to RMB7.8, while the H-share TP was lifted from HKD5.3 to HKD6.1. (ha/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-13 16:25.)

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