Cathay Soars Past Singapore Airlines in Travel Rebound Race
Amidst the travel industry's resurgence, a new stock leader emerges as $CATHAY PAC AIR (00293.HK)$ Cathay Pacific Airways overtakes Singapore Airlines $SIA (C6L.SG)$ in performance. This shift could continue, driven by Cathay's revitalization following years of pandemic constraints.
July witnessed a surge in "buy" recommendations for Cathay, reflecting a decade-high optimism due to attractive valuations and potential profitability. On the contrary, SIA's sentiment wavered as valuation-related downgrades since June took a toll.
Cathay's recovery began with a positive profit forecast for H1 2023, signaling a turnaround after grappling with severe travel restrictions.
$JPMorgan (JPM.US)$ analysts, including Karen Li, emphasized Cathay's underestimated post-pandemic earnings power and potential for optimistic earnings revisions. The airline's market dominance in Hong Kong positions it to capitalize on mainland Chinese transit flight demand.
While Cathay's stock rallied 21% since June, becoming Asia's top performer, SIA also gained 11% during this period. Wall Street's response was swift: JP Morgan and HSBC raised Cathay's rating, whereas Citigroup downgraded SIA.
Cathay's price-to-book ratio at 1.3 times is cheaper than SIA's 1.5 times, implying growth potential. Analysts predict an 18% upside for Cathay, while SIA already trades above consensus projections.
Though Cathay's rally might pause, analysts foresee more positive surprises, as the carrier's potential remains untapped.
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